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independent agency of the United States which protects the funds of depositors in banks in the event of the bank’s failure. Deposit insurance is backed by the full faith and credit of the United States government. In other words, the government of the U.S. has an unconditional obligation to pay the depositors’ losses in the event of a bank failure. Unlike 1933, U.S. bank deposits are now virtually risk-free up to the insured amount. FDIC insurance automatically covers all deposit accounts, including checking accounts, savings accounts, money market deposit accounts, and certificates of deposit . The standard coverage is $250,000 per depositor, for each account ownership . So if you had a savings account with just you as owner, it would be insured up to $250,000. If it were jointly owned — for example many couples share bank accounts, each depositor would be insured up to $250,000. The FDIC insurance does not cover other financial products and services a bank may offer, such as stocks, bonds, mutual funds, life insurance policies, annuities, or securities. The FDIC insurance does not cover losses of virtual currency. Interested in a career in the financial services industry? The American Banker’s Association has an excellent website with loads of information about different types of careers, hot financial services industry topics, and banking policy issues at aba.com. Prospective financial services industry employees may be asked to complete the Bloomberg Aptitude Test (BAT) which is a standardized multiple choice test designed as a screening tool for entry level positions in business and finance. You can find information about the BAT at bloomberginstitute.com . PRODUCT PREVIEW Being financially literate means having a basic understanding of different types of banks and the financial products they offer. Commercial banks serve people and businesses through their retail and business divisions. Retail divisions offer consumer financial products and services such as personal checking and savings accounts, loans, and credit cards. Business divisions offer products and services for businesses. Some checking accounts come with minimum balance requirements and fees for violating deposit agreement terms. Develop good banking habits. Use all of the account management tools the bank offers to prevent overdrafts or below-minimum balance fees. Carefully monitor your account balance, exercise spending restraint when funds are low, and sign up for account alerts that let you know when you’re approaching the low balance danger zone. Bank fees and penalties can quickly drain your account of your hard-earned money. THE BIG PICTURE
PONDER AND PREDICT One day in the not-too-distant future, you will graduate high school and go to college or career technical school with the goal of getting an education and learning a skill that enables you to earn an income and build wealth.
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THE 21st CENTURY STUDENT’S GUIDE TO FINANCIAL LITERACY
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