The Public app itself does not offer FDIC insurance directly; however, user cash balances in specific accounts can be insured through partner banks.
FDIC insurance protects depositors in the event of bank failure, covering up to $250,000 per depositor, per insured bank, for each account ownership category.
Public's High-Yield Cash Account can provide up to $5 million in aggregate insurance due to the sweeping of funds into multiple partner banks, legally allowing multiple insurance limits to apply.
SIPC (Securities Investor Protection Corporation) provides a separate layer of protection for investments held in accounts, covering up to $500,000 of total assets, with a limit of $250,000 on cash balances.
It’s crucial to note that while SIPC provides investor protection, it does not insure against losses from market fluctuations or investment risks.
The safety net offered by SIPC comes into play primarily in the event of a firm's insolvency, enabling customers to recover a portion of their assets.
Public uses Apex Clearing Corporation for clearing services, a reputable name in the industry, which enhances the overall trustworthiness of the platform.
The FDIC only insures depository accounts held at banks and does not extend to investments in securities or mutual funds.
The distinction between a bank account and a brokerage account is essential; while the former can be FDIC insured, the latter is always subject to market risk.
The structure of sweeping funds to multiple partner banks is an innovative approach to maximize FDIC insurance coverage, leveraging federal regulations that allow this aggregation.
When assessing how FDIC insurance works, it is important to understand that joint accounts, trust accounts, and retirement accounts like IRAs all have their own coverage limits.
Financial institutions like Public and others often use high-yield cash accounts to attract deposits by offering competitive interest rates while maintaining FDIC insurance coverage.
Public’s marketing of its insurance limits may lead to confusion, as users must manage their total deposits at each bank to stay within coverage limits effectively.
In practice, understanding your cash management strategy can dictate how effectively you utilize available insurance, given the total coverage across multiple institutions.
The Federal Deposit Insurance Corporation, established in 1933, was created in the wake of bank failures and runs that devastated American consumers during the Great Depression.
Investment accounts at Public are not FDIC insured because they hold securities rather than cash deposits, which is a commonly misunderstood facet.
Using technology such as 256-bit encryption, Public aims to secure user data, emphasizing the integration of strong cybersecurity practices alongside regulatory protections.
The combination of both SIPC and FDIC protections creates a multi-layered safety net for consumers utilizing the Public app, aligning with increasing demands for financial security.
Investors using apps like Public must remain aware of the potential for aggregation of accounts across different banks to safeguard their full insurance eligibility.