So I’ve heard about FDIC insurance and how it means that “your account is insured for up to $250,000.”
But let’s say I won $1M in the lottery. In order to maximize my insurance coverage, would I have to open up accounts at 4 separate banks? Or could I open 4 accounts at the same bank? If the latter, would these 4 accounts have to have their own separate logins? Or could I have a single login with, say, 4 money market accounts under that single login?
I swear I’ve tried to Google different variations of this question. I have even asked the poor accounts officer at my bank, but he didn’t seem terribly confident in his answer.
In: Economics
As it happens, some banks offer a service called ICS where they spread your money between multiple banks so that none of the accounts exceed $250k.
However, your deposit at a single bank is only insured by the FDIC to $250k, regardless of how many accounts you have.
That being said, the FDIC offers additional value. It requires member banks to follow safe procedures to reduce the risk of them going under. Currently, it is the most substantial regulatory scheme for banking in the US, as banks tend to want to be FDIC insured but need to follow its rules to do so. If a bank is insolvent or about to be, the FDIC can even step in to try to ensure none of its deposits are lost, often this means arranging for another bank to buy some or all of the failing bank at a reduced cost and promising to guarantee all the deposits.
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