FDIC Insurance
Definition
Federal insurance protecting bank deposits up to $250,000 per account at each FDIC-insured bank. If the bank fails, the FDIC pays you back. Covers checking, savings, and money market accounts. Does NOT cover investments like stocks or bonds.
Why It Matters
FDIC insurance is a safety net for your emergency fund. Even if the bank collapses, your $100,000 is protected. Don't let low rates at unsafe non-FDIC banks tempt you — the risk isn't worth it.
Example
Deposit $250,000 in a high-yield savings account at Bank A and $250,000 at Bank B. Both are FDIC insured for the full $500,000. If Bank A fails, FDIC pays you $250,000. Your full $500,000 is safe across both banks.