FDIC stands for the Federal Deposit Insurance Corporation. It can protect bank account balances, in the event a bank member that is insured by the FDIC folds but only up to certain monetary limits.

The public's perception of the FDIC is that it insures bank accounts. This may include checking, saving, money markets, and CDs. It offers protection up to $100,000 on your bank accounts. Remember that every bank is not a member of the FDIC.

It is important for people should understand how FDIC works. In the past, some people have had separate accounts at the bank, totaling $250,000, and believe all three accounts are covered for $100,000 by FDIC. This may not be true. For example, if you are the sole owner of three accounts and these include a checking, CD and savings accounts, you only have $100,000 of FDIC protection. If your wife is a joint owner on one of the accounts, then another $100,000 would apply.

FDIC also specifies that non-qualified and qualified money have separate protection. Therefore if you have a CD IRA, you will gain another $100,000 worth of insurance coverage from FDIC. This is an advantage to a person with a retirement account they either started or rolled over to the bank.

The value that FDIC brings to the banking community is immense. People have less fear of putting their assets in a FDIC insured bank. However, you should be careful how you classify your accounts, make sure that all of your money is protected by buying additional insurance on your money.

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