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When you deposit money with a bank that’s insured by the Federal Deposit Insurance Corp., the government guarantees that the funds will be protected, up to certain limits, if the bank fails. Many financial-technology companies that offer banking products; such as checking or savings accounts, are not FDIC ­insured, so customers’ funds are instead passed through to an institution that has FDIC coverage, although customers continue to interact with the fintech for banking services. This setup is designed to pro­tect customers’ funds if the fin­tech goes belly up. But tens of thousands of customers of Juno, Yotta and other online fintech companies encountered freezes on their accounts and were de­nied access to their money after Synapse Financial Technologies, a “deposit broker” that connects fintech firms to FDIC-insured banks, filed for bankruptcy last spring. Synapse maintained complex and faulty financial ledgers, according to court fil­ings, and there’s a shortfall of as much as about $95 million in funds owed to customers. Recently, many·customers were still waiting for their funds- and some may never get all their money back.  

Ensuring deposit coverage. 

The Synapse meltdown demon­strates that when a fintech promises federal deposit cover­age for account holders, that 

promise may not hold up if the system doesn’t work as intended. According to the FDIC’s website, “even if non-bank companies partner with FDIC-insured banks, funds you send to a non­bank company are not FDIC­ insured unless and until the company deposits them in an FDIC-insured bank.” 

The safest option is to open accounts directly with an FDIC­ insured bank or with a credit union that’s covered by the Na­tional Credit Union Share Insur­ance Fund. To find out whether a bank is federally insured, search for it at https://banks.datafdic.gov/bankfind-suite/bankfind. To look up a credit union, go to https://mapping.ncua.gov/ResearchCreditUnion. 

Backed by the U.S. govern­ment, the FDIC generally pro­vides coverage of up to $250,000 per depositor, per account own­ership category in the event of a bank failure. Similarly, the NCUSIF covers up to the same value per depositor in accounts held at credit unions. If you are the sole owner of a checking account, savings account and 

a certificate of deposit with a single institution, for example, your money is fully insured as long as the aggregate balance of those accounts is no more than $250,000. Additionally, if you have joint accounts, each depositor gets up to $250,000 in coverage-so a couple is insured up to $500,000 for their joint accounts. Use the calculators at httpsj/ediefdic.gov or https:// mycreditunion.gov/insurance­

estimator to check whether your deposits are fully insured. 

Article by: MARIAH ALANSKAS