Latest news with #bankcustomers
Yahoo
07-07-2025
- Business
- Yahoo
FDIC insurance: What it is and how it works
The FDIC is an independent agency of the U.S. government that protects bank customers from losing their money in a bank should it fail. Deposits are insured for up to $250,000 per depositor, per FDIC-insured bank, per ownership category. FDIC insurance covers traditional bank deposit products from insured banks, such as checking and savings accounts, but doesn't cover investments or payment providers such as PayPal. In the event of a bank failure, the FDIC will either transfer funds to another insured bank or issue a check. It's recommended to stay within the insurance limits for easy access to your insured funds. The FDIC insures up to $250,000 per depositor, per FDIC-insured bank, per ownership category when an insured bank fails. This guarantees consumers that their money is safe if an FDIC-member bank fails, as long as their balances are within the limits and guidelines. Here's what you need to know about how your money is backed by the government through the FDIC and the limits of such insurance. The FDIC is the agency that insures deposits at member banks in case of a bank failure. FDIC insurance is backed by the full faith and credit of the U.S. government. The thought of your bank failing could be alarming, but if your bank is insured by the Federal Deposit Insurance Corp. (FDIC), your money in that bank is protected by the federal government — up to a limit. It's a good idea to review the deposit insurance for your bank accounts now to be sure you're covered. FDIC insurance covers traditional bank deposit products, including checking accounts, savings accounts, certificates of deposit (CDs) and money market accounts. The FDIC classifies deposit accounts into several ownership categories. These include: Single accounts Joint accounts Corporate accounts Retirement accounts If an account holder has more than $250,000 in accounts that fall under a single ownership category at one bank, anything over that amount isn't insured. An individual account is insured separately from a joint account, since they're distinct ownership categories. Joint accounts are insured for $250,000 per co-owner, so a $500,000 CD owned by two joint account holders would be fully insured because each account holder is insured for up to $250,000. Likewise, accounts owned by corporations or partnerships are also considered a distinct ownership category. That means that businesses with more than $250,000 in their bank account won't get the excess amount insured, unless they split the funds between different banks, since each bank gets its own insurance limits. If, for example, Sarah has $250,000 in a joint savings account and $200,000 in a checking account as a single owner, her money is fully insured. Even though the total deposits exceed $250,000, the money is split between different ownership categories, so each account is insured separately. On the other hand, if Cameron has $200,000 in a high-yield savings account and $125,000 in a CD at the same bank in his name alone, $75,000 of his deposits won't be insured. To make sure his money is entirely federally insured, he could open an account at a separate FDIC-insured bank or transfer some of the money into a jointly owned account. Keep in mind there are legal and tax implications of a joint bank account, so understand how a joint bank account works. FDIC insurance also protects interest earnings, as long as the principal and interest combined don't exceed the $250,000 cap. Now, if you have $248,000 in a CD account that has earned $2,000 in interest, the full amount is covered because your account doesn't exceed the insurance limit. The FDIC doesn't insure investments. Here are some items that aren't bank deposits and aren't covered by FDIC insurance, even if they're in an account with a bank's name on it or if you bought one at a bank: Stocks Bonds Mutual funds Annuities Life insurance policies The FDIC also doesn't cover the contents of your safe-deposit box either. Payment providers, such as PayPal and Venmo, also don't qualify for FDIC insurance because they aren't banks. If you're not sure whether all your deposits are FDIC-insured, talk to a bank representative or use the FDIC's Electronic Deposit Insurance Estimator (EDIE) and enter information about your accounts. If you have less than $250,000 at a federally insured bank, all of your money is protected. Once you exceed that amount, you can safeguard your money and maximize insurance protection with a little strategic organization. Use multiple banks. Spreading your money between different FDIC-insured banks is one way to keep your cash protected. If, for example, you had $300,000, you could keep $200,000 at Bank of America and $100,000 at Chase (both banks are members of FDIC). Consider a trust. A trust is a legal vehicle that enables a third party — a trustee — to hold and direct assets in a trust fund on behalf of a beneficiary. The advantage of a trust is that it expands your options when managing your assets. Trusts also afford more protection because as many as five beneficiaries are insurable for up to $250,000 each. Keep your cash in different account categories. Joint account ownership offers more protection if your federally insured bank fails than single-account ownership because each account owner is insured for up to $250,000. So, if a couple had $500,000 in a joint savings account, their money would be insured by the FDIC — if they didn't have any other money in a joint account at that bank. A savings account of a single owner with $500,000 would only be insured for half that amount. The table below shows how different account ownership categories can affect your deposit insurance coverage. DIFFERENT TYPES OF ACCOUNT OWNERSHIP INSURED UNINSURED Account holder A (single ownership)Savings: $50,000CD: $250,000 $250,000 $50,000 Account holders A and B (joint ownership)Savings: $150,000CD: $325,000 $500,000 $0 Account holder C (Trust with up to 5 beneficiaries insured for up to $250,000 each)Beneficiary 1: $250,000Beneficiary 2: $250,000Beneficiary 3: $250,000Beneficiary 4: $250,000Beneficiary 5: $250,000 $1.25 million $0 Depositors don't need to file insurance claims to recoup their deposits. Nor do they need to apply for deposit insurance when they open up a bank account at an FDIC-insured institution. When a bank fails, the FDIC pays depositors by giving them an account at another insured bank in the amount equal to what they had at the failed bank, up to the insurance limits. If there's no bank to acquire the deposits, the FDIC simply issues the depositor a check usually within a few days. The former is usually what happens when a bank fails. Note that while the FDIC guarantees depositors won't lose any money up to the covered amount, there's no guarantee that if the funds move to a new bank they will earn the same interest rate. However, depositors can always withdraw the funds after a new bank acquires them with no penalty. It can take a few years to recover deposits that exceed the insurance limit. As the FDIC sells off a failed bank's assets, it typically issues periodic payments to depositors. Funds that exceed insurance limits are repaid on a cents-on-the-dollar basis. Silicon Valley Bank, for example, didn't have insurance coverage for more than 94 percent of its total deposits as of the end of 2022, according to the Federal Reserve. The FDIC announced it would pay back uninsured deposits in receivership certificates and dividend payments as it sells the closed bank's assets. Still, it's best to make sure your deposits don't exceed the FDIC limits, so you can readily access your insured funds as soon as the failed bank is acquired by another bank or the FDIC pays off closed accounts. Did you know? Some of the largest bank failures in U.S. history have happened in the past few years. It's common normal for there to be at least one bank failure in a year. This is why it's always smart to keep your money at an FDIC bank and within the deposit insurance guidelines. Why was the FDIC created? The FDIC was created in 1933 to protect consumers when financial institutions fail and are forced to close their doors. During the Great Depression, insurance for banks was not available. So when banks failed, Americans lost their savings. Now when banks fail, the FDIC steps in to protect depositors and their money. 'Bank failures are unusual,' says Mark Hamrick, Bankrate's senior economic analyst and Washington bureau chief. 'But when they happen, affecting covered institutions, FDIC coverage is important.' Having that insurance is a crucial backstop to financial uncertainty. Consumers can ensure that all of their deposits within the insurance guidelines are guaranteed by the government, and they don't have to worry about withdrawing their money from the bank. If your bank fails, the FDIC will pay out the insured amount by either setting up a new account at another bank or issuing you a check within a few days – often the next business day — so you should have access to your money pretty quickly. Generally, you can continue to bank as if a failure didn't happen immediately after a bank failure is announced. Which institutions are covered by FDIC insurance? Most banks, including online-only banks, offer deposit customers FDIC insurance. An online bank that's FDIC-insured has the same FDIC coverage as a brick-and-mortar bank. If you open an account with an FDIC-insured bank, you are automatically enrolled in the federal insurance. It's rare for a bank not to have FDIC insurance, but there are exceptions. Bank of North Dakota, for example, is not FDIC-insured. Instead, it is backed by the full faith and credit of the State of North Dakota. Credit unions are regulated differently from banks and have their own federal deposit insurance through the National Credit Union Share Insurance Fund (NCUSIF). The fund was created by Congress in 1970 to insure deposits in member credit unions. It's administered by the National Credit Union Administration (NCUA), which charters, regulates and monitors federal credit unions. The insurance is similar to what the FDIC provides, with a $250,000 cap for each account and owner. Do I need deposit insurance? You don't need to purchase deposit insurance because it's automatic and free for any eligible account opened at an FDIC-insured bank. Even if you have more than the standard $250,000 coverage limit, you can strategically get more coverage by opening an additional account with a different FDIC-insured bank for the excess. You could also keep your cash within the same bank but in multiple accounts with different ownership categories. In the event of a bank failure, FDIC insurance provides crucial protection for consumers' deposits. With up to $250,000 in coverage per depositor, per FDIC-insured bank, per ownership category, it's important for individuals and businesses to understand the limits and guidelines of this insurance. While most banks, including online-only banks, offer FDIC insurance, it's still important to confirm this coverage and make sure all deposits fall within the insured limits. By spreading deposits across different ownership categories, individuals can maximize their insurance protection. It's always best to stay within the insurance limits to ensure quick and easy access to insured funds. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
National Post
26-06-2025
- Business
- National Post
Customers in Canada Increasingly Turning to Retail Banks for Advice, J.D. Power Finds
Article content RBC Ranks Highest in Retail Banking Advice Satisfaction Article content TORONTO — The financial health of bank customers in Canada—who are pressured by inflation, the rising cost of living and growing personal debt—has been worsening during the past few years. Currently, more than 44% of bank customers are considered financially vulnerable, 1 a jump from 36% five years ago. According to the J.D. Power 2025 Canada Retail Banking Advice Satisfaction Study, SM released today, customers are increasingly turning to their banks for advice to help navigate daily financial challenges, with 71% expressing concern about the cost of living and 36% saying they're struggling to manage housing costs such as mortgage and utilities. Article content Article content 'The eroding financial health of customers and their fear that economic conditions may worsen are driving customers—especially younger ones with growing deposits—to seek financial advice from their retail bank at an accelerated pace,' said Jennifer White, senior director for banking and payments intelligence at J.D. Power. 'This combination presents a golden opportunity for retail banks to rise to the challenge and offer services and advice that go beyond the transactional. Customers are shifting their focus from longer-term goals such as investment and retirement planning to more immediate concerns like paying bills, reducing debt and sticking to a budget. Banks that are attuned to their customers' pain points and can provide relevant and frequent financial advice will be positioned to benefit from a loyal customer base.' Article content Below are additional key findings of the 2025 study: Article content Appetite for bank advice is growing: More than one-fourth (26%) of bank customers say they are 'very interested' in receiving bank advice or guidance, up from 19% in 2021. Interest in bank advice is particularly strong among immigrants who have lived in Canada less than two years (47%), as well as among affluent customers (32%) and young mass affluent customers (31%). Article content Shift in advice focus: While investment- and retirement-related advice continue to be the most sought-after topics, the study reveals a shift in customer priorities since 2021. Interest in advice addressing immediate needs such as ways to pay bills on time has increased 4 percentage points and borrowing/credit-related guidance has increased 2 percentage points. In contrast, demand for investment- and retirement-focused advice has declined 7 percentage points and 4 percentage points, respectively. Article content Rising satisfaction with advice: Banks seem prepared to meet demand as customer satisfaction with the financial advice they are getting from their bank has improved from 2024. Overall satisfaction is 579 (on a 1,000-point scale), 13 points higher than a year ago. Key drivers of this improvement include the frequency, quality and relevancy of the advice, as well as the level of concern financial institutions show for their customers' needs. Article content Advice recall stalls: Although 49% of customers say their bank has done a good job of making their interactions memorable, the trend has plateaued this year. This signals a need to find more effective engagement strategies. The study shows that strong marketing communications that affirm and reassure customers that the bank is there for them when needed (on demand) is the preferred approach. Article content Study Ranking Article content RBC Article content ranks highest in customer satisfaction for a fifth consecutive year, with a score of 595. Article content CIBC Article content (590) ranks second and Article content Scotiabank Article content (580) ranks third. Article content The Canada Retail Banking Advice Satisfaction Study includes responses of retail bank customers in Canada who received any advice/guidance from their primary bank regarding relevant products and services or other financial needs in the past 12 months. It measures customer satisfaction with retail bank advice/guidance based on performance in five core dimensions on a poor-to-perfect rating scale. Individual dimensions measured are (in order of importance): clarity of advice; concern for customer needs; relevancy; quality; and frequency of advice. This year's study, which includes responses of 2,582 retail bank customers, was fielded from January through March 2025. Article content In addition to bank financial advice ratings, the study also provides financial health support index benchmarking data that evaluates the proficiency of banks and credit card issuers in delivering financial health support to customers and includes such services as helping customers make better financial decisions or helping them meet savings, creditworthiness or budgeting goals. Article content Top-performing banks in the banking financial health support index are (in alphabetical order): CIBC and RBC. Top-performing credit card providers in the credit card financial support index are (in alphabetical order): Desjardins, RBC, Scotiabank and TD. Article content For more information about the Canada Retail Banking Advice Satisfaction Study, visit Article content J.D. Power Article content is a global leader in consumer insights, advisory services, and data and analytics. A pioneer in the use of big data, artificial intelligence (AI) and algorithmic modeling capabilities to understand consumer behaviour, J.D. Power has been delivering incisive industry intelligence on customer interactions with brands and products for more than 55 years. The world's leading businesses across major industries rely on J.D. Power to guide their customer-facing strategies. Article content Article content Article content Article content Article content Contacts Article content Media Relations Contacts Article content Gal Wilder, NATIONAL; 416-602-4092; Article content gwilder@ Article content Article content Geno Effler, J.D. Power; West Coast; 714-621-6224; Article content Article content
