In 2015, China established a deposit insurance system, which operates with a limit on payouts. The maximum payout limit is 500,000 yuan per depositor. “If the total amount of funds, including the principal and interest of all insured deposit accounts held by the same depositor at the same insured institution, is within the maximum payout limit, full compensation will be provided. If it exceeds the maximum payout limit, compensation will be made from the liquidation of the insured institution’s assets in accordance with the law.”
This means that if a depositor has deposits in the same bank and the bank goes bankrupt, up to 500,000 yuan of their funds can be compensated. However, amounts exceeding 500,000 yuan cannot be fully guaranteed and will be subject to the order of liquidation. Therefore, for ordinary people depositing money in small banks, it is advisable to keep the funds within the limit of 500,000 yuan to ensure safety.
It is worth noting that the 500,000 yuan payout limit includes both the principal and interest. If you have deposited 500,000 yuan in principal, in the event of a bank bankruptcy, you will only receive the principal amount, and the interest may not be fully compensated. Therefore, if you want to ensure the absolute safety of both principal and interest, it is necessary to control the deposit amount appropriately. For example, if you purchase a five-year deposit certificate with a 4% annual interest rate from a city commercial bank, to ensure the absolute safety of the principal and interest after five years, it is better to keep the principal amount at around 400,000 yuan. After five years, the total principal and interest will be 480,000 yuan, which is within the insurance limit of 500,000 yuan.
However, even with the deposit insurance system in place, it does not mean that funds within 500,000 yuan are absolutely safe. For ordinary individuals, when purchasing financial products from banks, it is important to clarify whether it is a deposit or an investment product. If it is a deposit product, it can enjoy the protection of the deposit insurance system. However, if it is an investment product, it falls outside the scope of the deposit insurance system, and in the event of any risk, individuals will bear the profit or loss themselves.