FDIC Insurance Explained

In this article we’ll cover:

1. What is FDIC Insurance?
2. Other financial products. Are they covered?
3. How does FDIC Insurance protect bank customers?

What is FDIC Insurance?

You’ve probably seen the signs that say: “Each depositor insured to at least $250,000.” Have you ever thought about what that sign really means?

The Federal Deposit Insurance Corporation (FDIC) was formed to protect the money deposited into accounts at banks covered by FDIC insurance. That means your money is protected up to $250,000 per depositor, per insured bank, for each account category.

FDIC coverage separates insured accounts into different categories, such as single accounts, joint accounts, certain retirement accounts and others. These categories cover checking and savings accounts, money market deposit accounts and certificates of deposit. As an FDIC Member, the coverage is automatic – so you don’t need to apply.

“Cornerstone Bank has a long history of offering financial services in the Dakotas. During that time there have been numerous financial crises including most recently the Great Recession in 2008 and economic uncertainty during the Covid-19 pandemic,” said Gary Petersen, Chairman. “Cornerstone Bank has shown resiliency because of strong leadership and adhering to conservative banking principles. As an FDIC insured bank, we fully subscribe to the regulatory framework that has kept the banking industry, particularly community banks, safe and sound for decades.”

What about other financial products?

Even if they are invested through the bank, other financial products like stocks, bonds, mutual funds and securities are not covered .

Talk with one of our bankers to explore ways to set up your accounts for maximum FDIC coverage. We’re here to help keep your money secure and protected.

How does FDIC Insurance protect bank customers?

• The FDIC insures up to $250,000 in eight separate account categories per depositor per bank.
• In the 88-year history of the FDIC, no one has ever lost a penny of an insured deposit.
• The banking industry completely funds the FDIC, not taxpayer dollars.
• The banking industry knows that a strong FDIC and deposit insurance fund are essential to the banking system. Banks stand ready to do whatever it takes to ensure the health of the fund and strength of the FDIC.

To learn more check out this video from the FDIC. Have more questions or want to calculate your FDIC coverage? Click here. 

Should I use a Debit Card or a Credit Card?

Most of us carry at least two pieces of plastic to pay for things – a debit card and a credit card. But what’s the difference between the two?

In this article we talk about:

1. What is the difference between a credit and debit card
2. Which one is better?
   1. Debit cards
   2. Credit cards
3. Which one you should use.

So what’s the difference?

To begin with, think of it this way: With a credit card, you’re borrowing someone else’s money to make a purchase, but you’ll have to pay it back. With a debit card you’re pulling money directly from your own bank account. It’s the difference between taking out a short-term loan or spending only what you have.

So which one is better?

Let’s just say, ‘it depends.’

Debit Cards

Using a debit card is like writing a check. You’re spending money from your account for goods or services. If you don’t have enough money in your account, the debit will be turned down. If you do, money is deducted from your account almost in real time. Debit cards can also be used at ATMs or to get cash back at places like grocery stores. These cards can be great to help keep you from spending more money than you actually have and they can be great for in-store purchases.

Learn more about your Cornerstone Bank debit card and it’s features by visiting the Debit Card Page.

Debit Card Tip: Carrying a debit card is safer than carrying cash. If you need cash you can always use your debit card at an ATM to make a withdrawal.

Credit Cards

Credit cards can be perfect for large purchases because you’re borrowing someone else’s money for a short period of time. They also come with some liability protections and benefits that most debit cards don’t have. These benefits might range from cash back, to points for airline miles or lodging. Benefits can also include extended warranties or rental car insurance. Because of these protections, using a credit card for rentals or online purchases can be safer than using a debit card.

While both card types offer ways to dispute a purchase, your credit card issuer is trying to get its money back from a merchant. With a debit card dispute the money that came from your account is gone and unavailable for use until the dispute is resolved.

That doesn’t mean credit cards don’t come with drawbacks. If you have trouble controlling your spending or paying your account bill on time, it can be costly. That’s because interest is charged on bills that aren’t paid in full by the end of each billing period. You could also face a late fee. The longer you take to pay off the bill, the more you’ll pay in interest charges.

It’s also quite possible that credit cards that offer rewards will charge you an annual fee, whereas debit cards often come free with an account at your financial institution.

Learn more about our Cornerstone Bank Credit Cards and find the right fit for you by visiting our Credit Cards Page. Or to apply click here. 

Credit Card Tip: When used responsibly, credit cards are a great tool to help you build your credit score.

So which one should you use?

While credit cards generally come with more protections, you’ll want to make sure you pay them off as fast a possible to avoid paying interest charges. Responsible use of a credit card can also help build your credit score.

Debit cards, on the other hand, can be great for in-store purchases and are good for people who want to limit spending to only what is in their account.

Either way, experts recommend that you always monitor your accounts online and to report any discrepancies immediately. You should report a lost or stolen card immediately.

No matter what card you use, be sure to take the time to read about your protections and rights as a cardholder.

To find the right product and learn more about the different types of cards visit with one of our bankers today! 

Are you making some common financial mistakes?

What you do with your money can get you into a financial mess, but it can also get you out.

Face it, we buy things – and that can mean trouble if we spend too much and don’t leave enough to save or pay bills each month.

In this article we will cover:

1. How your spending can make a difference
2. The secret to avoiding common financial mistakes

Your spending makes a difference.

Taking out a loan for a new SUV or a bigger house can mean bigger payments and higher interest costs each month.

Think about it: The difference between a top-model vehicle and the entry-price model can cost you hundreds of dollars more in payments each month. The same goes for the amount of interest you’ll pay over the life of the loan. That’s money you could be using to pay off credit card debt or add to your savings.

Even the seemingly ‘little things’ can add up. Expenses like a gym membership, a new smartphone, or dinner out on a regular basis can add up.

Expert Tip: Cutting your spending by only $50 a week will save you $2,600 year – enough to pay down loans or even sink into an emergency savings account to help you cover unexpected expenses down the road.

What’s The Secret to Avoiding Common Financial Mistakes?

The key to staying ahead of spending problems, follow a budget. Knowing how much you owe and what your income is will give you a good picture of your monthly finances.

Expert Tip: Assess your needs and cut back wherever possible.

The concept is simple, spend less than you make. Then with the extra money, you can come up with a plan to put the rest into savings or invest for the future.

It can feel overwhelming. Maybe you aren’t sure where to start. Getting help from a financial professional is a great place to start. They will be able to take a fresh look at things for you.

Beware and don’t let your savings or having a little extra money in your checking account at the end of the month tempt you.

Expert tip: Set up an automatic transfer from every paycheck to go into a savings or separate account. If it’s automatic you won’t see it! Start small with $5 and grow from there.

Ready to get started on the right path with your finances? Meet with a banker today!

A home equity line of credit (HELOC) has many benefits for you and all of your financial needs.

In this article we will cover:

1. What is a HELOC
2. How does a HELOC work?

What is a Home Equity Line of Credit (HELOC)?

A HELOC, is based off the value of your home and is a second mortgage that gives you access to cash to help you pay for things such as home improvement projects, unexpected expenses, or that dream vacation, just to name a few. You can draw from this line of credit and repay all or some of it monthly. It works similar to a credit card but is secured by a mortgage on your home.

Calculate your loan payment amount. (NOTE: this is only an estimate. Actual loan payment amount and rates can vary)

How does a Home Equity Line of Credit Work?

This type of loan allows you to borrow against your home’s equity, pay it back, and repeat. Most HELOCs have a variable interest rate. This means that as the baseline interest rates go up or down, the interest rate on your HELOC will go up or down. Your banker will set your starting interest rate by using an interest rate index. Then add a markup depending on your credit score and loan-to-value ratio. Generally the higher your credit score, the lower the markup. Before signing off on the HELOC, you should review all the documents and the margin with your banker to make sure you fully understand the terms.

Contact a banker today to get started!