Ever heard of the FDIC? That’s too bad.

You see back during the Great Depression, banks lost a lot of money. People panicked and ran to the banks to take out their money. Banks lost even more money, and this processed repeated itself for awhile. Savings were being wiped out.

It was ugly with a capital B.

In response to this, the government established the FDIC or Federal Deposit Insurance Corporation. This organization is responsible for the money you put into banks. It’s job is to keep it safe. It does this by insuring the accounts you have at a bank.

Let me explain…

Say you use the Bank of Make-Believe where you have a savings account with $100. Then one day, the bank goes under – out of business. The next day you go to the bank of Make-Believe and someone’s working there, and is waiting to give you your $100 back. That’s the FDIC.

This was happened recently with several banks most notably Indy Mac. The FDIC seized the bank when it became concerned that the bank could no longer financially operate. Most people who banked at Indy Mac could get their money back.

There’s two things you need to know about the FDIC. First, some accounts are insured and some are not. Savings accounts, checking accounts, certificates of deposits (CDs), and money market accounts are all insured by the FDIC. IRA retirement accounts may also be insured under a separate arrangement.

Secondly, as college students, you probably don’t have to worry about this, but it’s good to know that there’s a limit that the FDIC will insure. It’s $100,000 at any individual bank. So not a concern for you now, but a good thing to know nonetheless.

So check on the FDIC website or contact your bank to make sure it’s FDIC insured. It probably is, but knowing it for a fact, can be quite a comforting thing.

In the meantime, check this video out:

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