What is FDIC insurance, and why it matters?

Khalid Keenan

CEO, Elevate Pay

Feb 2, 2024

·

3 mins

Ensuring the safety of bank deposits is the most fundamental requirement of any financial system. In the US, one key mechanism that provides peace of mind to depositors is the Federal Deposit Insurance Corporation (FDIC) banking insurance. So it's surprising that a number of the leading providers of USD payment platforms do not provide it. Let's explore the origins of FDIC, its role in protecting depositors, and why it matters to you.

Safeguarding Deposits: The Creation of FDIC Banking Insurance

Following the turmoil of the Great Depression in the 1930s, widespread bank failures left depositors vulnerable to significant financial losses. To restore public confidence in the banking system and promote stability, the United States Congress established the FDIC in 1933 with a primary purpose to provide insurance coverage for bank deposits, assuring depositors that their money would be protected even if their bank encountered financial distress.

Who Does FDIC Banking Insurance Protect?

FDIC banking insurance serves as a safety net for individual depositors, ensuring that their funds are safeguarded up to a certain limit. Initially set at $2,500 in 1933, the FDIC insurance coverage has increased over the years to the current standard limit of $250,000 per depositor, per insured bank. This means that if a bank were to fail, each depositor's accounts would be insured up to $250,000, providing essential protection for individuals, families, and small businesses.

Why FDIC Insurance Matters

  1. Peace of Mind: Knowing that your hard-earned money is protected against the risk of bank failures. The guarantee of insurance coverage allows individuals to focus on their financial goals without the constant worry of losing their deposits.

  2. Financial Stability: By assuring depositors like you that your funds are safe, the FDIC helps prevent bank runs and mass withdrawals that can make matters worse during a financial crises. This stability is essential for maintaining public confidence in the banking system and promoting economic resilience.

Ensuring Your Bank Account is FDIC Insured

To ensure the safety of their deposits, individuals should verify that their bank account is FDIC insured. The FDIC logo or its equivalent should be prominently displayed at the bank's physical branches or on their website. Additionally, the FDIC's online database, BankFind, allows users to confirm the insurance status of a particular bank.

It is crucial to note that not all financial products offered by banks are FDIC insured. Examples include stocks, bonds, mutual funds, and annuities. Depositors should carefully review the terms and conditions of their investment products to determine if they are covered by FDIC insurance.

Why is Elevate different?

For residents in emerging markets the options for holding USD balances has been very limited, FDIC insured accounts are even rarer. Even the leading existing platforms like Payoneer and Wise do not offer FDIC-insured accounts and your balance deposits are only as secure as the fintech itself.

At Elevate we partner directly with a licensed FDIC insured US bank, and the bank is where your funds are deposited. That means unlike the other options out there you benefit from the same protections that are provided to US residents when they hold their funds with a US bank.

Feedback

Your feedback drives us forward! We'd love to learn about your USD payment journey - the successes, the challenges, and what Elevate can do to enhance it. Reach out to me on LinkedIn or send your questions to hello@elevatepay.co, and let's make payments hassle-free together.

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© 2024 Elevate Pay. Bloom Financial Technologies Inc trading as Elevate Pay is a financial technology company, not an FDIC insured depository institution. Banking services provided by Bangor Savings Bank, Member FDIC. FDIC insurance coverage protects against the failure of an FDIC insured depository institution. Pass through FDIC insurance coverage is subject to certain conditions. The Elevate Pay Mastercard® Debit Card is issued by Bangor Savings Bank, Member FDIC, pursuant to license by Mastercard International Incorporated. Mastercard is a registered trademark, and the circle design is a trademark of Mastercard International Incorporated. Spend anywhere Mastercard is accepted.

© 2024 Elevate Pay. Bloom Financial Technologies Inc trading as Elevate Pay is a financial technology company, not an FDIC insured depository institution. Banking services provided by Bangor Savings Bank, Member FDIC. FDIC insurance coverage protects against the failure of an FDIC insured depository institution. Pass through FDIC insurance coverage is subject to certain conditions. The Elevate Pay Mastercard® Debit Card is issued by Bangor Savings Bank, Member FDIC, pursuant to license by Mastercard International Incorporated. Mastercard is a registered trademark, and the circle design is a trademark of Mastercard International Incorporated. Spend anywhere Mastercard is accepted.