What Is The Depositors Insurance Fund (DIF)?

In the early 1930s, a run on banks left some people who had deposited money in local banks without access to their life savings. To prevent such a run from happening again, the Bank Act of 1933 established the Federal Deposit Insurance Corporation (FDIC) which protects deposits up to $250,000 in checking, savings or money market accounts.

The Depositors Insurance Fund was one of the first precursors to the FDIC. It was established in 1932 to protect depositors in Massachusetts in the event of a bank run. Today, DIF is a type of deposit insurance that protects balances above $250,000.

Understanding how the Depositors Insurance Fund (DIF) works can be valuable if you’re facing a liquidity event such as the sale of a home, the sale of a business or a large cash windfall that would push your savings above $250,000. Here’s what you need to know about it.