By Marcia Passos Duffy

Today, when a bank fails people might feel anxiety, but it doesn't cause the blind panic of the crash of 1929 - when people lined up to pull their money out of banks.

Most of us alive today don't remember - but history books will tell you - that before the government insured your bank-deposited money, there was absolutely no safety net if something went wrong. If a bank failed it was your own tough luck and the bank took all of your hard earned money down with the sinking ship.

As a result, in 1933 Franklin D. Roosevelt created the FDIC, the Federal Deposit Insurance Corporation, to insure that this kind of crazy rush on banks would never happen again.

If it wasn't for Roosevelt's foresight, you can bet the bank panic of 1929 would have happened again in 2008 when the stock market took a nosedive and banks started dropping like flies.

How the FDIC protects your money

The FDIC web site asserts that, "no depositor has ever lost of penny of insured deposits since the FDIC was created in 1933." So how does it work?

1. Bank must be FDIC insured. To get the benefits of insurance, your bank must be insured by the FDIC (an insured bank will always display an official FDIC sign at each teller window). Deposits at credit unions are insured by the National Credit Union Administration. The insured bank pays insurance premiums to the FDIC. Not only are brick and mortar savings banks insured, but your high interest online savings account may also be FDIC insured - be sure to check for the FDIC symbol when signing up.
2. If the Insured bank fails, the FDIC pays. If a bank or savings institution goes belly up, the FDIC steps in and pays depositors their money. You get all your money back - including principal and any accrued interested up to the date the bank closed.
3. Limits to Insurance. Before 2008 that insurance limit was $100,000. On Oct. 3, 2008, Congress raised the FDIC insurance amount permanently to $250,000 - per depositor, per insured bank.
4. High worth individuals must spread wealth. If you are fortunate enough to have more money than $250,000 in one bank you need to spread the overflow money out among separate banks since deposits in separate branches or accounts at one bank are not separately insured.
5. Different categories can be separately insured. It is possible to have more than $250,000 at one bank and still be fully insured says the FDIC. While single accounts (owned by one person) are limited to $250,000 per owner, joint accounts allow $250,000 per co-owner (so a couple could have in total $500,000 that is insured. For more info see the FDIC's brochure, "Your Insured Deposits."

What is insured, what is not

Not every account or investment made at your FDIC-insured bank is actually insured. Here's a list of what is, and isn't, covered:

Covered by FDIC:

• Checking accounts
• Savings Accounts
• Money Market Accounts
• NOW (or Negotiable Order of Withdrawal accounts)
• Certificate of deposits

Not covered by FDIC:

• Anything in your safe-deposit box
• Annuities
• Bonds
• Money market mutual funds
• Stocks
• Treasury securities
• Investment products (through your bank or a broker)

Not sure if your bank, savings institution, or online high interest savings account, is FDIC insured? You can use the FDIC's "Bank Find" at or call toll-free 1-877-ASK-FDIC. If you're not sure whether your bank account or assets in one bank are below the qualifying $250,000, use the FDIC's free calculator to check what's covered.