Pass-through deposit insurance.
In plain English
Pass-through deposit insurance lets FDIC coverage flow through a middleman to the actual owners of the money. When a fintech app, prepaid program, or broker places customer cash in a pooled account at a partner bank, coverage can pass through to each customer, up to 250,000 dollars each, but only if strict conditions are met: the records must identify each owner and the account must be titled as custodial. If those conditions fail, the pooled account may be insured only as one, leaving customers exposed. It is why the fine print on a fintech's insurance claim matters.
01Why it matters
Many fintech apps advertise FDIC coverage that only works through pass-through rules, so understanding the conditions tells you whether your money is really insured to you.
02The math, step by step
A payment app holds your balance in a pooled account at a partner bank. Pass-through insurance covers your share up to 250,000 dollars, but only if the app keeps proper records identifying you as the owner.
03What this is NOT
Pass-through coverage is NOT automatic. It applies only when strict record-keeping and titling conditions are met, so a fintech balance is not necessarily insured to you the way a direct bank deposit is.
04Receipts
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