Is Step FDIC Insured? How Your Money Is Protected

Step, a financial technology company, offers various services to manage personal finances. Many individuals considering these platforms wonder about the safety of their deposited funds. This article explains how Step ensures the protection of customer money through Federal Deposit Insurance Corporation (FDIC) insurance.

Understanding FDIC Insurance

The Federal Deposit Insurance Corporation (FDIC) is an independent U.S. government agency. It was established to maintain stability and public confidence within the nation’s financial system. Its core mission involves protecting depositors’ money in insured banks. If an FDIC-insured bank fails, the FDIC steps in to safeguard customer accounts, ensuring access to funds.

FDIC insurance covers various types of deposit accounts held at an insured bank. These include checking accounts, savings accounts, money market deposit accounts, and certificates of deposit (CDs). This insurance does not extend to investment products, such as stocks, bonds, mutual funds, life insurance policies, annuities, or cryptocurrency.

The standard insurance coverage limit is $250,000 per depositor, per insured bank, for each account ownership category. Different ownership categories, such as individual accounts, joint accounts, and certain retirement accounts, are separately insured up to this limit. This structure allows for greater total coverage if funds are held in different ownership categories or at multiple distinct FDIC-insured institutions.

How Step Accounts Receive FDIC Insurance

Step functions as a financial technology company, not a bank. It does not directly hold customer deposits or provide FDIC insurance. Instead, Step partners with FDIC-insured banks to provide banking services and hold customer funds. For example, Step’s financial products are powered by its bank partner, Evolve Bank & Trust, which is a Member FDIC institution.

This arrangement enables customer funds deposited through Step to be eligible for “pass-through” FDIC insurance. Funds are held at the partner bank, and this underlying bank provides the federal deposit insurance. The insurance coverage applies up to the standard limits set by the FDIC.

While you interact with Step’s application and services, the actual safeguarding of your deposits is handled by their FDIC-insured bank partner. This partnership ensures your money benefits from the same federal protections as funds held directly at any traditional bank.

Applying FDIC Coverage to Your Step Funds

The standard FDIC coverage limit applies to funds held through Step accounts on a per depositor, per insured bank, per ownership category basis. This means all funds you hold at Step’s primary partner bank, Evolve Bank & Trust, across all your accounts in the same ownership category, are combined and insured up to this $250,000 limit. For instance, if you have both a checking and a savings account with Step under your individual name, their combined balance is insured up to $250,000 at Evolve Bank & Trust.

In some cases, Step may utilize a network of “Program Banks” in addition to its primary partner. For funds exceeding the standard $250,000 limit, amounts may be deposited with one or more of these additional FDIC-insured banks. This strategy can potentially increase your overall FDIC insurance coverage beyond the initial $250,000, as each distinct partner bank offers its own separate $250,000 coverage limit.

For example, if Step distributes your funds across two different FDIC-insured partner banks, you could have up to $250,000 insured at each bank, effectively doubling your coverage for that ownership category to $500,000. Step Black members may be eligible for up to $1,000,000 in FDIC coverage through specific arrangements with Evolve Bank & Trust and its program banks.