SoFi is a financial technology company that primarily offers a range of financial products and services, including student loan refinancing, personal loans, mortgages, investing, and banking.
So, is SoFi FDIC insured?
SoFi investment accounts are not FDIC-insured. However, there’s a crucial caveat – SoFi Checking and Savings accounts are indeed eligible for FDIC insurance coverage.
Technically, SoFi is not under the FDIC, but your money is protected, in practice, since it uses FDIC insurance banks to deposit it.
In this article, we will examine SoFi structure and how it affects investor protection regarding FDIC Insurance.
Is SoFi FDIC Insured?
No. SoFi is a financial technology company that offers a wide range of financial services, from investment to banking services. Therefore, when it comes to investment accounts, they are not protected under the FDIC. However, SoFi Checking and Savings accounts are eligible for FDIC insurance coverage.
Think of it like this:
- SoFi Checking and Savings: FDIC-insurance of up to $250,000 per member (joint accounts are insured up to $500,000);
- Money you’ve put into stocks, bonds, etc.: NOT FDIC-insured. It has a different kind of protection called SIPC protection1.
SoFi’s Insured Deposit Program
SoFi’s Insured Deposit Program is a strategic move that fortifies the security of funds within SoFi Checking, and Savings accounts accounts. Collaborating with a network of FDIC-insured banks, the program spreads your deposits across diverse institutions. This strategic division mitigates risk and guarantees that, even in the improbable event of a bank’s failure, your deposits are sheltered by FDIC insurance within specified limits.
By implementing this approach, SoFi bolsters security, ultimately providing the potential to increase coverage up to $2M per customer of FDIC Insurance.
Understanding FDIC Insurance
The Federal Deposit Insurance Corporation (FDIC) insurance stands as a cornerstone of financial security for depositors in the United States. This protection offers peace of mind by safeguarding your funds against potential bank failures.
In essence, FDIC insurance is a safety net for your deposits, covering a wide range of accounts, including savings, checking, and certificates of deposit (CDs).
The assurance extends up to $250,000 per depositor per bank, ensuring that a significant portion of your funds remains safeguarded even in the face of unexpected challenges.
It’s important to note that FDIC insurance applies exclusively to traditional banking products, not investments like stocks, bonds, mutual funds, or other securities. The coverage primarily pertains to cash deposits, ensuring that even if a bank faces financial difficulties, your hard-earned money is shielded up to the specified limit.
| FDIC deposit insurance covers: | FDIC deposit insurance does not cover: |
| Checking accounts | Stock investments |
| Negotiable Order of Withdrawal (NOW) accounts | Bond investments |
| Savings accounts | Mutual funds |
| Money Market Deposit Accounts (MMDAs) | Life insurance policies |
| Certificates of Deposit (CDs) | Annuities |
| Cashier’s checks | Municipal securities |
| Money orders | Safe deposit boxes or their contents |
| Other official items issued by an insured bank | U.S. Treasury bills, bonds, or notes |
| – | Crypto assets |
Understanding SoFi: A Closer Look
SoFi is a financial technology company that offers a variety of services to help you effectively manage and grow your wealth.
SoFi is a startup providing banking services like Checking and Savings accounts alongside investment opportunities. SoFi offers some of the most popular current investment choices, including fractional shares, a wide variety of cryptocurrencies and initial public offering (IPO) investing. Retirement accounts and robo-advising are also available.
Sofi’s user-friendly platform and intuitive apps make managing portfolios, conducting research, and trading easy. They prioritise education with resources like classes and guides, and their responsive support team is available for assistance.
Conclusion
In conclusion, SoFi stands as a versatile financial technology company, offering a spectrum of services to enhance financial well-being. Investments such as stocks, bonds, and mutual funds aren’t covered by FDIC insurance, they do fall under the protection of the Securities Investor Protection Corporation (SIPC).
However, their strategic Insured Deposit Program extends FDIC coverage to specific products like Checking and Savings accounts through partner banks, extending coverage up to $2 million per customer.
1SIPC (Securities Investor Protection Corporation) coverage safeguards funds invested in securities, such as stocks and bonds, in case of broker insolvency.
The Minho Investment Association (MIA) is a junior initiative from the University of Minho (Portugal), which aims to promote financial literacy among young people.
