What are "uninsured deposits" in banking?

What are "uninsured deposits" in banking?

• A. Deposits that are insured by the FDIC
• B. Deposits exceeding the FDIC's insurance limit per depositor
• C. Deposits in foreign banks
• D. Deposits made by corporate entities only

Answer: (B)

Uninsured deposits refer to funds held in a bank account that exceed the maximum amount of insurance coverage provided by the Federal Deposit Insurance Corporation (FDIC) for a single depositor. As of October 2023, the standard insurance amount is $250,000 per depositor, per insured bank, for each account ownership category. When an individual's or entity's deposits surpass this limit, the excess amount is not protected by FDIC insurance, rendering it at risk in the event of a bank failure. Understanding this is crucial for depositors, as it highlights the importance of managing deposits in a way that remains within the insured limits to ensure full protection. Any amount above this threshold—whether it's a personal account or a business account—will not be insured. Thus, option B accurately defines uninsured deposits within the context of banking and FDIC insurance limits.

Uninsured deposits refer to funds held in a bank account that exceed the maximum amount of insurance coverage provided by the Federal Deposit Insurance Corporation (FDIC) for a single depositor. As of October 2023, the standard insurance amount is $250,000 per depositor, per insured bank, for each account ownership category. When an individual's or entity's deposits surpass this limit, the excess amount is not protected by FDIC insurance, rendering it at risk in the event of a bank failure.

Understanding this is crucial for depositors, as it highlights the importance of managing deposits in a way that remains within the insured limits to ensure full protection. Any amount above this threshold—whether it's a personal account or a business account—will not be insured. Thus, option B accurately defines uninsured deposits within the context of banking and FDIC insurance limits.