Why Should Online Financial Services Be FDIC Insured?
One reason for using FDIC-insured financial services is that they are more secure. Unlike traditional banks, FDIC-insured companies like Current do not require customers to visit physical branches. Instead, they allow customers to bank on their computers and mobile devices. Customers can still speak to a live financial representative if they have questions about the online process.
You should know that not all financial services that you use online are FDIC-insured. For example, you must check your deposit insurance before signing up for a service. The FDIC will decide whether your deposits are protected or not. Insured banks cannot change these rules.
Deposit Insurance
FDIC insurance protects your money in two ways. First, it pays you the full balance of your account, dollar for dollar, up to the insurance limit. Second, it covers your account’s accrued interest. If a bank fails, the FDIC will provide you with a new account at another insured bank and issue a check within a few days. The FDIC also takes on the responsibility of selling off the bank’s assets and settling its debts.
When choosing an online bank, look for an institution that offers FDIC insurance. The vast majority of banks offer this type of insurance, and the federal government automatically insures those that are FDIC-insured. Checking to see whether a bank is FDIC insured is easy with the FDIC’s BankFind Suite. However, you should be aware that some non-bank companies offer FDIC-insured deposit products, act as deposit brokers, or negotiate contractual agreements with other FDIC-insured banks.
Coverage For Joint Accounts
If you have a joint account, you can have more coverage than separate accounts. This coverage is determined by the total amount of money in each joint account divided by the number of joint owners. You can even have joint accounts with beneficiaries. However, you have to meet certain requirements for joint accounts, which include maintaining good records for the account.
FDIC insurance covers your account up to $250,000 per depositor. This applies to the principal and interest on the account. However, FDIC insurance does not cover some products, so you need to check with your bank before purchasing them.
Personal Relationships
The FDIC is a federal financial regulatory agency. Its mission is to protect consumer deposits in member banks. Its board of directors includes representatives of the Consumer Financial Protection Bureau and the Office of Comptroller of the Currency. While FDIC insurance protects consumer deposits at banks, deposits held in credit unions are generally insured by the National Credit Union Administration.
Proprietary ATMs
Internet banks are a newer type of financial institution. These institutions are FDIC-insured, and they provide banking services without branches. For example, security First Network Bank, the first FDIC-insured Internet bank, began operations on Oct. 18, 1995. Because these banks have low overhead and few employees, they can offer customers higher interest rates and lower service fees. This has spurred customers to use these institutions more. Today, 60 percent of account holders use online banking.
