What is a benefit of the FDIC?

What is a benefit of the FDIC?

• A. No depositor has ever lost insured funds
• B. Higher interest rates on savings accounts
• C. Access to private banking services
• D. Free financial advising services

Answer: (A)

The benefit of the FDIC, or Federal Deposit Insurance Corporation, being that no depositor has ever lost insured funds speaks to the agency's primary purpose: to maintain public confidence in the banking system. When a bank fails, the FDIC protects depositors by ensuring that they can recover their insured deposits, up to the insurance limits (currently $250,000 per depositor, per insured bank, for each account ownership category). This insurance safeguard tends to reinforce consumer trust, encouraging people to use banks for their savings and checking needs without fear of losing their deposits due to bank insolvency. In contrast, the other options do not accurately reflect the core benefits of the FDIC. Higher interest rates on savings accounts may vary based on market conditions and bank policies, but they are not a safety feature provided by the FDIC. Access to private banking services is typically offered by individual banks, not the FDIC itself. Similarly, free financial advising services are not provided by the FDIC, as its focus is on deposit insurance rather than personal financial advice. Thus, the insurance aspect of the FDIC is integral to its mission and directly benefits depositors by protecting their funds.

The benefit of the FDIC, or Federal Deposit Insurance Corporation, being that no depositor has ever lost insured funds speaks to the agency's primary purpose: to maintain public confidence in the banking system. When a bank fails, the FDIC protects depositors by ensuring that they can recover their insured deposits, up to the insurance limits (currently $250,000 per depositor, per insured bank, for each account ownership category). This insurance safeguard tends to reinforce consumer trust, encouraging people to use banks for their savings and checking needs without fear of losing their deposits due to bank insolvency.

In contrast, the other options do not accurately reflect the core benefits of the FDIC. Higher interest rates on savings accounts may vary based on market conditions and bank policies, but they are not a safety feature provided by the FDIC. Access to private banking services is typically offered by individual banks, not the FDIC itself. Similarly, free financial advising services are not provided by the FDIC, as its focus is on deposit insurance rather than personal financial advice. Thus, the insurance aspect of the FDIC is integral to its mission and directly benefits depositors by protecting their funds.