Is Your Savings Protected?

In most countries there is something known as deposit insurance,a measure introduced by policy makers in many countries to protect deposits, in full or in part, in the event of their bank or other financial institution fails or goes bankrupt.

Deposit insurance varies from one country to another but in most cases they are designed to protect less financially sophisticated depositors and to contribute to financial stability in an environment where banks are allowed to lend, or use otherwise, most of the money that they receive as deposits instead of safe-keeping the full amounts

The failure of a bank has the potential to trigger a much broader spectrum of harmful events. Deposit insurance systems are one component of a financial system safety net that contributes to the promotion of financial stability.

The Federal Deposit Insurance Corporation (FDIC), is an independent agency of the United States government. The FDIC protects depositors against the loss of their insured deposits if an FDIC-insured bank or savings association fails. FDIC insurance is backed by the full faith and credit of the United States government.

If a depositor's accounts at one FDIC-insured bank or savings association total $100,000 or less, the deposits are fully insured. A depositor can have more than $100,000 at one insured bank or savings association and still be fully insured provided the accounts meet certain requirements. In addition, federal law provides for insurance coverage of up to $250,000 for certain retirement accounts.

In Canada, the Canada Deposit Insurance Corporation (CDIC), provides the same function as the Federal Deposit Insurance Corporation (FDIC).

SOURCE: Federal Deposit Insurance Corporation (FDIC), Canada Deposit Insurance Corporation (CDIC), Wikipedia.org