Toolbox: What You Need to Know about Deposit Insurance

Most of us don’t spend much time worrying about how safe our money is in the bank. And we shouldn’t. However, during these uncertain economic times, it is more important than ever to be aware of a few nuances to ensure your bank is fully safeguarding your deposits.

FDIC Insurance is the first step.

The FDIC insures all deposits up to $250,000 per depositor, and most banks, at least the reputable ones, are FDIC insured. So, in the unlikely event that your bank failed or there was a bank run, you’d be covered for up to $250,000 of your savings, checking and money market accounts; certificates of deposit; and retirement accounts.

But what if you have more than $250,000 in deposits? What happens then?

Enter the Depositors Insurance Fund (DIF).

The DIF is a private, Massachusetts-based fund that covers savings and mutual banks. It fills the gap that the FDIC leaves behind. The DIF insures all deposits above the FDIC limits, meaning your money is 100 percent safe, 100 percent of the time. This applies to personal, business, nonprofit and government accounts.

All banks that are members of the DIF are also members of the FDIC. But the reverse is not true.  Most member banks display DIF signs on doors and at teller stations and note their membership in advertisements and marketing brochures. Look for “Member FDIC / Member DIF,” or simply ask a customer service representative.

So, you checked and your bank provides DIF. What next?  

Absolutely nothing. There are no forms, no paperwork, no special fees. Your coverage begins the moment you open a deposit account. If your bank does not offer DIF, it is likely time to reevaluate your relationship with the institution. 

Peace of Mind

Again, when you deposit money in the bank, you shouldn’t have to worry about whether it will be there when you need it. Taking the small step to make sure your institution provides DIF coverage provides the peace of mind you deserve. And considering that no depositor has ever lost a penny in a bank insured by both the FDIC and DIF, that’s peace of mind you can take to the bank!

Glenn FitzGerald is an Assistant Vice President and Small Business Relationship Manager with The Cooperative Bank of Cape Cod.