FDIC Limits and How to Insure Excess Deposits

Peace of mind. That’s what you want when you place your money in a bank or savings institution. You want to know that your money is safe and sound, and chances are you’ve heard about FDIC insurance and know that it’s there to protect your dollars. What you may not know is exactly what the coverage limits are with FDIC insurance, and that there are full-coverage options available for your deposits – outside of the FDIC.fdic-limits-insure-excess-deposits

Most U.S. banks are members of the FDIC, or the Federal Deposit Insurance Corporation. The purpose of the FDIC is to protect your deposits in the event of a bank failure. If an FDIC-insured institution fails, each customer there will have their deposits protected, up to $250,000. FDIC insurance covers all types of deposit accounts, including certificates of deposit (also known as CDs), checking and savings accounts, as well as money markets and some types of retirement accounts. It does not however cover investment accounts such as stocks, bonds or mutual funds, or life insurance policies, even if you purchased those products from an FDIC-insured bank.

FDIC insurance is backed by the full faith and credit of the U.S. government, and since the FDIC’s creation, no depositor has ever lost a penny of their FDIC-insured deposits. But what about depositors that have more than $250,000 in a bank account? One way to insure excess deposits is through the Depositors Insurance Fund – commonly referred to as DIF.

The Depositors Insurance Fund is a private insurance fund that provides supplemental protection for funds deposited with Massachusetts-chartered savings banks. The good news is that if you don’t live in Massachusetts, you can still reap the benefits of DIF coverage. The Depositors Insurance Fund does not impose any residency restrictions, so as long as a DIF member bankAs a courtesy, you will be leaving Blog.Bank5Connect.com and going to another website. We have approved this site as a reliable partner, but you will no longer be under the security policy of Bank5Connect.com. Come back soon! accepts out-of-state deposits, you can open an account there and have your deposits covered in full.

Another way to obtain DIF coverage is to open an account with an online bank that is tied to a Massachusetts-chartered savings bank. For example, Bank5 Connect is an online bank that is a division of BankFive, a DIF member bank located in Fall River, Massachusetts. So, all deposits placed in a Bank5 Connect account are covered by DIF, regardless of which state the depositor resides in.

When you open a deposit account at a DIF member bank, DIF insurance automatically kicks in. There are no forms or applications to fill out, and there are no fees or surcharges required to obtain coverage.

In the event of a bank failure, the Depositors Insurance Fund works very closely with the FDIC. After a bank goes under, the priority for both organizations is to ensure depositors get their funds as quickly as possible. In addition, the DIF and the FDIC work together to determine what portion of the deposits are the FDIC’s responsibility and what portion will be paid out by the DIF.

To learn more about DIF coverage at Bank5 Connect, visit http://www.bank5connect.com/home/misc/fully-insured-deposits.

For more general information about FDIC and DIF coverage, go to:

http://www.FDIC.govAs a courtesy, you will be leaving Blog.Bank5Connect.com and going to another website. We have approved this site as a reliable partner, but you will no longer be under the security policy of Bank5Connect.com. Come back soon!

http://www.DIFxs.comAs a courtesy, you will be leaving Blog.Bank5Connect.com and going to another website. We have approved this site as a reliable partner, but you will no longer be under the security policy of Bank5Connect.com. Come back soon!

A Comprehensive Blanket of Insurance Covers Bank5 Connect Deposit Accounts

If you enjoy the convenience and features that Bank5 Connect has to offer, here’s another bonus that comes with our online-only banking – all your deposits are insured in full.AdobeStock_60654093

There’s no need to worry that your deposits are at risk at any time. When you place your money in a Bank5 Connect account, you can be assured that every penny is totally covered by deposit insurance.

That’s because Bank5 Connect is a Federal Deposit Insurance Corporation (FDIC) and Depositors Insurance Fund (DIF) member bank. This means each depositor is insured by the FDIC to $250,000. All deposits above this amount are covered by the DIF.

Simply put, there are no gaps in insurance coverage for Bank5 Connect customers’ deposit accounts. That’s about as risk free as you can get.

Plus, there is no dollar limit to the DIF’s coverage – the Fund covers everything above the FDIC limit of $250,000. What’s more, all deposits placed in a Bank5 Connect account are eligible for DIF coverage. That includes checking accounts, savings accounts, and certificates of deposit.

Another great feature of DIF coverage? There are no forms or applications to fill out to receive the insurance. It’s automatic and free.

Since the inception of both insurance programs, no depositor has ever lost a penny of FDIC- or DIF-insured deposits. That in itself is a remarkable track record.

How and why did each program come about? Here’s a quick overview.

The DIF was established by the Massachusetts legislature in 1934 as an alternative to the FDIC. At that time, Massachusetts savings banks, by state law, were not allowed to join the FDIC.

However, the law was changed in 1956 to allow Bay State savings banks to join the federal insurance program. For those that did, the DIF became known as an excess deposit insurer, meaning the Fund insured deposits in excess of the FDIC limit. By 1986, all DIF member banks had joined the FDIC.

Even though state law created the DIF, it is a private deposit insurance company and not backed by the state or federal government.

On the other hand, the FDIC is an independent agency of the United States government that protects you against the loss of your deposits if an FDIC-insured bank or savings association fails. FDIC insurance is backed by the full faith and credit of the U.S. government.

The FDIC was created as a result of widespread bank failures during The Great Depression in the 1920s and 1930s. In addition to establishing the agency, the Banking Act of 1933 also regulated the volatile banking industry and renewed the public’s confidence in the banking industry. The Banking Act of 1935 made the FDIC a permanent government agency.

So the next time you place money in one of your Bank5 Connect deposit accounts, take comfort in knowing that it has a total blanket of insurance coverage.

You can learn more about the FDIC at its website at www.FDIC.govAs a courtesy, you will be leaving Blog.Bank5Connect.com and going to another website. We have approved this site as a reliable partner, but you will no longer be under the security policy of Bank5Connect.com. Come back soon!

Additional details about the DIF are available at www.DIFxs.comAs a courtesy, you will be leaving Blog.Bank5Connect.com and going to another website. We have approved this site as a reliable partner, but you will no longer be under the security policy of Bank5Connect.com. Come back soon!