Certificates of deposit (CDs) are a type of interest-bearing bank account in which you deposit funds for a fixed period of time—usually between 3 months and 5 years—with the aim of earning a higher interest rate than you would with a standard savings account. Like all bank deposit accounts, the money you put in a CD is insured for up to $250,000 if the bank is a member of the Federal Deposit Insurance Corp. (FDIC).
Key Takeaways
- Verifying that a bank is an FDIC member ensures your deposits up to $250,000 will be protected should the bank fail. The NCUA provides the same coverage for deposits at credit unions.
- The $250,000 limit applies across your combined deposits at one institution, so this includes balances in checking, savings, money market, and/or certificate of deposit accounts.
- The $250,000 coverage limit applies per person, per institution. This means spouses holding deposits at the same bank or credit union are covered up to $250,00 each, or $500,000 total.
- If your total deposits at one institution exceed $250,000, it's smart to open any additional CDs elsewhere, to keep your deposit under the $250,000 per institution threshold.
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Are CD Balances Insured by the FDIC?
The FDIC insures up to $250,000 per depositor, per FDIC-insured bank, per ownership category. That means if you have a checking account balance of $20,000, a savings account balance of $100,000, and a CD in the amount of $50,000 all at the same bank, you have a total of $170,000 that is covered by the FDIC insurance.
However, if those balances in total or individually exceed $250,000, the FDIC wouldn't cover any amount more than amount. Therefore, it’s important to keep an eye on your account balances because you may need to move an account to a different bank to make sure your total assets are covered by the FDIC.
Are CDs from Online Banks Also FDIC-Insured?
Yes, provided the online bank is FDIC-insured. This should be noted on the online bank’s website, but if it’s not or you're not sure, speak with a bank representative to confirm if the online bank is FDIC-insured. FDIC coverage limits for online banks are the same as with brick-and-mortar banks: $250,000 per depositor, per FDIC-insured bank, per ownership category.
Is My Brokered CD FDIC-Insured?
Unlike CDs available at banking institutions, brokered CDs must be purchased from brokerage firms and independent salespeople. If the brokered CD is set up in your name with an FDIC-insured bank, it will be covered by the FDIC up to the $250,000 limit per depositor, per FDIC-insured bank, per ownership category.
However, if the bank isn't FDIC-insured, it won't be covered. It’s important to find out beforehand where the brokered CD will be set up to ensure proper FDIC coverage.
How Do I Get My Money if My Bank Fails?
If your bank fails, the FDIC could replace your insured funds in one of two ways. Within a few days following the bank closure, the FDIC could set up and fund a new account in your name at another bank with the amount you were insured for, or the FDIC could issue you a check for the insured amount.
How Do I Know My Bank or Credit Union Is FDIC-Insured?
Credit unions aren't insured by the FDIC; instead, they are insured by the National Credit Union Administration (NCUA), which also insures deposits for up to $250,000. To find out if your bank is FDIC-insured, ask your local bank representative. Many banks also display an FDIC sign stating they are covered by the FDIC. The FDIC’s BankFind tool also can locate FDIC-insured banks near you.
How Can I Make Sure All My CDs Are Insured by the FDIC?
First, check with your banking institution to make sure it’s an FDIC-insured bank. Second, make sure your deposit accounts don’t exceed the $250,000 limit per depositor, per FDIC-insured bank, per ownership category. If you aren’t sure, you can input your deposit account information into the FDIC's Electronic Deposit Insurance Estimator (EDIE), visit the FDIC Information and Support Center and submit a request for deposit insurance coverage information, or call the FDIC at 1-877-ASK-FDIC (1-877-275-3342).
Does the FDIC Protect My CD From Identity Theft or Fraud?
No, the FDIC only protects your CD if your bank fails. You should talk with your banking institution to find out what security and protection elements are in place in the event of identity theft or fraud.
The Bottom Line
CDs can be a great way to save money and earn interest to boost your savings. Getting CDs from an FDIC-insured bank protects that money up to $250,000 per depositor, per FDIC-insured bank, per ownership category. It’s important to always confirm your banking institution is FDIC-insured and to ensure that the total of all your deposit accounts at that institution doesn't exceed $250,000 to make sure your CDs are protected by the FDIC.
