When a bank is FDIC insured, does it mean that anything below 250k is insured to be given back during a loss? How about accounts above $250k?

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  • May 08,2018
  • 6 answers

When a bank is FDIC insured, does it mean that anything below 250k is insured to be given back during a loss? How about accounts above $250k?


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Insurance Answers (6)

StephenWeinstein 5 months ago

The insurance only guarantees $250k per depositor (not per account). However, in many failures, they are able to get another bank to take over and pay all the deposits in full so no one loses anything.

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DON W 5 months ago

The other responses are correct, but there are ways to have more than $250K in one bank and still be fully FDIC insured, such as having different types of accounts. The FDIC website has the full rules.
Also, the reality is that when banks fail, the FDIC typically arranges for the failed bank to be taken over by a stronger bank, rather than the FDIC writing refund checks to each depositor. In such cases, the depositors continue to do business with the bank, but under a different bank name. So, on Monday you had $100K at Whitehall Bank, which goes out of business, and by the following Monday you receive a letter welcoming you to the Bank of Michigan family of depositors, still with $100K.

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Billy 5 months ago

Any accounts with balances over $250,000 are only insured for the first $250,000. So if the bank defaults and you have $1,000,000 in that bank, you stand to lose $750,000 because you are only covered for up to $250,000. That's why people often spread their accounts over several banks when they have more than $250,000 to keep. Like if I have $1,000,000, by spreading it out over four banks, I can have the whole $1,000,000 insured.

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Eva 5 months ago

$250k is the limit. If you had $300k in the account, they would still only pay $250k.

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Judy 5 months ago

yes, but not amounts over 250k

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Casey Y 5 months ago

That's only when a bank fails....which is actually somewhat rare...more rare than you would think.
That's per depositor in any one bank...so if you have more than that in assets, you can spread your deposits across multiple banks to keep them FDIC insured. If you are a both big enough and a good client, you can ask for Excess Deposit Insurance, for which the bank will pay, which would protect your deposit up to the limit you want. That being said, you'd better be a sizeable client...

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