Many of us work very hard for our money. We do it in order to stay alive, stay afloat, and live a good life. When we put that money aside into our savings accounts we can use it for our and our children’s dreams and aspirations, or as a safety net; should we ever encounter an emergency. Every month we put aside as much as we can into our savings accounts. However, while our money protects us and our dreams, who is protecting the money in our savings accounts? The answer is the federal government.
The Great Depression began in the 1920s, and a big part of that problem was the failure of thousands of banks. When those banks failed, customers lost their money. It was devastating. Imagine working hard all your life and putting your earnings away, only to see it all vanish over night in an incredible economic collapse. Of course, many people lost their homes and were forced into a life of poverty. Banks had failed before, of course, but never on such a massive scale.
As a response to this devastating event, the government created the Federal Deposit Insurance Corporation (FDIC). The FDIC takes monthly premiums from American banks and creates a fund which can be drawn upon in the event of a bank failing. The bank may fail, but customers will not lose their money. All deposits are insured up to $100,000, and certain other retirement accounts are insured up to $250,000. The current economic and banking crisis has caused the FDIC to raise the amount of money insured to $250,000. It will revert to its normal level of $100,000 on January 1, 2010.
If you have more questions about your savings, the FDIC, the current banking crisis, or any other aspects of your financial picture – be sure to sit down with a financial adviser or qualified financial services expert until you feel comfortable with your knowledge.
