Customers Bank offers high-yield savings accounts and CDs with attractive interest rates, as well as high-interest checking accounts with low fees, offering cash back rewards on everyday purchases with their Visa debit card.
Customers Bank offers FDIC insured deposits; however, their mobile app has received poor reviews and most accounts require visiting a branch to open.
What is FDIC Insurance?
The Federal Deposit Insurance Corporation (FDIC) is an independent agency established as a response to bank collapses of the 1920s and ’30s. Their mission is to minimize economic effects associated with bank failure while safeguarding depositor funds deposited with any bank or thrift institution, regardless of location of banking operations – this protection applies regardless of whether banks operate online banking platforms such as online banking platforms like OnlineBankingService.org or brick-and-mortar locations are available.
FDIC insurance coverage currently caps out at $250,000 per depositor, bank, and ownership category – meaning one individual may hold up to this maximum at various banks and accounts belonging to multiple ownership categories within one bank. Nonetheless, there are ways you can maximize your coverage and ensure your protection in case of financial instability or bank failure.
FDIC insurance protects all forms of deposit products, such as checking accounts, savings accounts, money market deposits and certificates of deposit (CDs). However, it does not cover investment products such as mutual funds, life insurance policies or annuities – for more details visit the FDIC website.
When a financial institution fails, the FDIC steps in to take over and pay out deposits quickly – as soon as two business days after being acquired or closed by them.
The Federal Deposit Insurance Corporation is funded by depositors and financial institutions through premium payments they make for participation in its deposit insurance program. There are no associated fees with FDIC insurance, nor is signing up necessary in order to open bank accounts. You can find out whether a bank is insured by using its BankFind Suite tool; alternatively, their website lists them by state.
How is FDIC Insurance Calculated?
The FDIC is a federal deposit insurance agency that ensures your money deposited at member financial institutions – such as banks and savings associations – will remain safe even in case they go under. That’s why it’s vitally important that instead of stuffing bills under your mattress, save some of your hard-earned cash by opening an account!
The Federal Deposit Insurance Corporation (FDIC) covers up to $250,000 of deposits at any given financial institution for every depositor and ownership category combined. If you open two accounts at one bank, $250,000 from each is covered under FDIC insurance; an additional $50,000 would not qualify due to falling into another ownership category; but, on a positive note, more than $250,000 could still be deposited if divided up across different ownership categories.
Example: Suppose that you own one Schwab Bank Investor Checking account under just your name and one Schwab brokerage (non-retirement) account using its Bank Sweep feature with cash balances totalling $75,000 that have been swept to Schwab Bank deposits; your total would be approximately $1,007,000; however if this total were divided among multiple joint Schwab Bank Investor Checking and Schwab brokerage (non-retirement) accounts owned jointly between both you and your spouse (with both owners using Bank Sweep), your total would increase significantly and exceed $3,500,000 due to multiple ownership categories being split among multiple ownership categories!
As well as splitting deposits across ownership categories, another way of increasing coverage is placing some cash into FDIC-insured deposit accounts owned by fiduciaries–legally established entities established to manage another person or entity’s assets–that are FDIC insured separately from your deposits in each ownership category and protected up to their applicable limits.
Use the Electronic Deposit Insurance Estimator (EDIE) to evaluate your own FDIC insurance coverage and, if you have any inquiries or require help in making decisions about how best to secure your money. Schwab Banking Center personnel would be delighted to assist in helping you identify the optimal solutions.
How Much FDIC Insurance Do I Need?
Deposits at insured banks are generally returned in full – principal and interest – in the event of bank failure, thanks to FDIC insurance and trustee services. They act as collectors and sellers for failed banks while collecting assets to sell and settle debts as necessary; additionally they accept responsibility for paying claims up to their insurance limit of $250,000 per depositor/bank (this includes funds in single accounts as well as joint accounts).
Major banks typically offer FDIC-insured traditional savings accounts and certificates of deposit, along with money market accounts and certificates of deposit. Unfortunately, holding investments such as stocks or mutual funds at an insured bank won’t be covered under FDIC coverage – they only cover deposits made at insured banks such as checking/savings accounts, money market deposit accounts or certificates of deposit accounts.
As soon as you open a new account with the FDIC, they’ll add it automatically to your total insured amount. If you want to increase this coverage by opening multiple ownership categories at one bank at the same time. If necessary, use their Deposit Insurance Estimator tool (EDIE DSIE ) to determine your current insurance amount.
Ideally, married individuals should keep their funds in a joint account that both names appear on. The FDIC provides coverage up to the standard insurance amount of $250,000 per co-owner’s share in an ownership category; payable-on-death accounts (PODs) also fall within this umbrella and are insured separately from co-owner’s shares at one bank in that category (up to $250K maximum coverage per account). You can also consider setting up irrevocable or informal trust accounts commonly known as payable-on-death accounts (PODs), by naming three beneficiaries per account – this additional layer of protection provides maximum coverage of up to $250k maximum coverage per account category within that bank; payable-on-death accounts can also offer added protection up to that maximum coverage amount per account in totality.
The FDIC has never lost a penny of insured funds in response to bank failure, working swiftly to ensure depositors gain timely access to their insured funds in such circumstances. Most often, FDIC will transfer them directly or issue checks.
How Does FDIC Insurance Work?
FDIC deposit insurance protects bank customers in the unlikely event of financial institution failure, covering deposits up to $250,000 per depositor per insured bank and ownership category (e.g. individual, joint and IRA accounts). This coverage applies for principal, interest accrued or due through date of failure, plus accrued or due interest at failure date. Unlike auto or health policies, FDIC deposit insurance comes at no additional cost; instead it’s included automatically when opening accounts at insured banks.
Deposit accounts typically qualify for FDIC insurance protection–this includes checking and savings accounts, money market accounts and certificates of deposit. Other financial products like securities and mutual funds do not carry such coverage.
Whenever a bank fails, the FDIC takes swift action to ensure depositors can quickly access their insured funds and sell off assets to settle debts. Depending on its size, this may take years – during this time uninsured deposits may receive periodic payments (usually on a pro-rata “cents on the dollar”) from proceeds of sale of assets from failed banks.
Though FDIC-insured accounts provide excellent savings opportunities, there are other methods available to you to protect your hard-earned dollars. You could invest in a safe or money market account at another bank for added protection; or consider banking services like Betterment’s Wealthfront Cash Account that offer FDIC-insured deposit accounts which allow you to “spread out” funds among multiple partners–providing additional safeguards against potential risk.
Bank failures are extremely unlikely events. Since 2001, only 566 bank failures were overseen by the FDIC, with their latest occurring just last month in March 2023. While this number may seem small, it still can cause unnecessary anxiety when saving for big purchases or retirement planning. FDIC deposit insurance helps ease that anxiety by safeguarding any money held tucked away should your savings become exposed in an unlikely bank failure event.
