SoFi Offers Increased FDIC Insurance for Checking and Savings Accounts
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Summary:
SoFi, a digital personal finance company, has announced it will offer up to $2m in Federal Deposit Insurance Corporation (FDIC) insurance for members who hold checking or savings accounts. The additional insurance is available via the newly created SoFi FDIC Insurance Network, a partnership with multiple banks designed to offer the best benefits to SoFi customers. The offer is currently open to new members and will be rolled out to existing ones over the next week.
SoFi Technologies Inc. has announced that it will now allow its members to access up to $2 million in Federal Deposit Insurance Corporation (FDIC) insurance for their checking and savings accounts, an increase from the standard amount of $250,000. This move is aimed at providing greater security and peace of mind for SoFi’s members during these uncertain times.
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What is FDIC insurance?
FDIC insurance is a type of protection that the Federal Deposit Insurance Corporation provides to depositors in the event that a bank fails. It covers up to $250,000 per depositor per bank, so if a bank were to fail, depositors would be reimbursed for up to that amount. The FDIC is an independent agency of the federal government that was created in 1933 in response to the Great Depression. It provides this insurance to help maintain stability and public confidence in the nation’s banking system.
How does SoFi’s offer work?
SoFi has partnered with multiple banks to create the SoFi FDIC Insurance Network, which allows SoFi members to access up to $2 million in FDIC insurance. For those who opt-in to the increased coverage, SoFi will seamlessly place their deposits beyond the standard insurance coverage with specifically identified FDIC-insured partner banks. This means that SoFi members can rest easy knowing that their deposits are safe and secure, even in the event that one of the banks fails.
Why is this important?
The increased FDIC insurance coverage is an important move for SoFi because it helps to mitigate near-term deposit withdrawal risk and reduce the risk of deposit flight to larger banks. As the recent banking crisis has shown, consumers can become nervous about the safety of their deposits and may choose to move them to larger banks that they perceive to be safer. By offering increased FDIC insurance, SoFi is giving its members a reason to stay put and not move their deposits elsewhere.
SoFi’s move to offer increased FDIC insurance for its checking and savings accounts is a smart one that will help to provide greater security and peace of mind for its members. By partnering with multiple banks to create the SoFi FDIC Insurance Network, SoFi is able to offer its members up to $2 million in insurance coverage, which is a significant increase from the standard amount of $250,000. This move is not only important for SoFi’s members but also for the company itself, as it helps to mitigate deposit flight risk and could lead to increased growth in the future.
Key takeaways
- SoFi is allowing members to access up to $2 million of Federal Deposit Insurance Corporation (FDIC) insurance for checking and savings accounts, up from the standard $250,000 amount.
- The benefit is available to new members and will become available to existing members over the next week.
- Through its FDIC Insurance Network, SoFi is partnering with multiple banks to provide increased coverage to members.
- Analysts have praised the move, calling it “encouraging” and noting that it minimizes deposit withdrawal risk and reduces the risk of deposit flight to larger banks.
- SoFi’s bank charter, obtained last year, is an important growth vector for the company and gives the lending business access to lower-cost financing.
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