Are your bank accounts covered by the FDIC?

Q: How secure is the FDIC (Federal Deposit Insurance Corporation)? It's supposed to insure bank deposits up to $100,000. Are all banks covered? I am concerned that some of my savings may not be covered.

A: The FDIC insures nearly all banks and savings associations in the United States. In addition to looking for the FDIC sign that member banks and savings associations must display, you can confirm FDIC-insured status by using the "BankFind" tool on the FDIC's Web site (www.fdic.gov) or calling the FDIC toll-free at 877-275-3342.

The FDIC's operations are funded by its Deposit Insurance Fund (DIF), which currently totals $52 billion. This reserve fund is replenished by premiums paid by insured banks and savings associations. The FDIC is required by law to maintain the DIF reserves at a target level. If the DIF were to fall below this level, the FDIC is required to raise bank premiums to bring it back to the level within a year.

Should the DIF reserve funds ever be insufficient — say, if a lot of banks failed at once — the FDIC has several additional resources at its disposal.

It can draw on a $30 billion line of credit with the U.S. Treasury, and it can, through special assessments, draw upon the capital of the banking industry. In addition, insured deposits are backed by the full faith and credit of the United States, which means that the resources of the U.S. government stand behind insured depositors.

It's important to remember that not every account or deposit at an FDIC bank is insured. Money invested in stocks, bonds, mutual funds, life-insurance policies, annuities or municipal securities are not covered, nor are the contents of safe-deposit boxes.

FDIC insurance only comes into play when an FDIC-insured bank or savings association fails. In that case, depositors would receive the principal and accrued interest in their deposit accounts, up to the insurance limit of $100,000. Federal law provides for insurance coverage of up to $250,000 for certain retirement accounts.

For details on FDIC coverage for other accounts at the same or different banks, go to www.fdic.gov/deposit/deposits/insured/index.html.

In the event of bank failure, the law requires the FDIC make payments as soon as possible. Historically, that's within a few days of a bank's closing. The agency would either establish an account at another insured bank or provide a check.

Customers with uninsured deposits will wait longer to receive payment for some or all of their uninsured deposits. The amount they receive, if any, is based on the sale of the failed bank's assets. Depending on the quality and value of these assets, it may take several years to sell the assets. As assets are sold, uninsured depositors receive periodic payment on their uninsured deposit claim.

Sources: Andrew Grey, FDIC spokesman, Washington D.C., and www.fdic.gov.

Fix It is an occasional feature. Send your questions to fixit@startribune.com. Sorry, no personal replies.