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FDIC deposit insurance protects your money in deposit accounts at FDIC-insured banks in the event of a bank failure. Since the FDIC was founded in 1933, no depositor has lost a penny of FDIC-insured funds.
How FDIC Deposit Insurance Works
The FDIC helps maintain stability and public confidence in the U.S. financial system. One way we do this is by insuring deposits to at least $250,000 per depositor, per ownership category at each FDIC-insured bank.
The FDIC maintains the Deposit Insurance Fund (DIF), which:
- Insures deposits and protects depositors of FDIC-insured banks and
- Helps fund our resolution activities when banks fail.
The DIF is backed by the full faith and credit of the United States government, and it has two sources of funds:
- Assessments (insurance premiums) that FDIC-insured institutions pay and
- Interest earned on funds invested in U.S. government obligations. The FDIC buys Treasury notes, and the interest on those notes helps the DIF grow.
FDIC deposit insurance only covers deposits, and only if your bank is FDIC-insured.
Make sure your bank is FDIC-insured, using the BankFind Suite search tool.
How to Know If Your Account is Covered
FDIC insurance covers deposits in all types of accounts at FDIC-insured banks, but it does not cover non-deposit investment products, even those offered by FDIC-insured banks. Additionally, FDIC deposit insurance doesn’t cover default or bankruptcy of any non-FDIC-insured institution.
Covered
Money deposited at FDIC-insured banks in:
Negotiable order of withdrawal (NOW) accounts
Money market deposit accounts (MMDAs)
Time deposits such as certificates of deposit (CDs)
Cashier’s checks, money orders, and other official items issued by a bank
Safe deposit boxes or their contents
U.S. Treasury bills, bonds, or notes
Understanding Your Coverage Limits
FDIC deposit insurance covers $250,000 per depositor, per FDIC-insured bank, for each account ownership category.
Ownership categories include:
- Single Accounts
- Joint Accounts
- Certain Retirement Accounts —for example, Individual Retirement Accounts (IRAs)
- Trust Accounts
- Employee Benefit Plan Accounts
- Corporation / Partnership / Unincorporated Association Accounts
- Government Accounts
All of your deposits in the same ownership category in the same FDIC-insured bank are added together for the purpose of determining FDIC deposit insurance coverage. However, you may qualify for more than $250,000 in FDIC deposit insurance coverage if you deposit money in accounts that are in different ownership categories.
For example:
If you have a single ownership account at an FDIC-insured bank, and you have a joint ownership account with one or more people at the same bank, you will be insured for up to $250,000 for your single ownership account deposits and also insured separately for your ownership interest up to $250,000 for all of your joint ownership account deposits.
If you have a single ownership account in one FDIC-insured bank, and another single ownership account in a different FDIC-insured bank, you will be insured for up to $250,000 for your single account deposits at each FDIC-insured bank.
If you have two single ownership accounts (such as a checking account and a savings account) and an individual retirement account (IRA) at the same FDIC-insured bank, then you will be insured up to $250,000 for the combined balance of the funds in the two single ownership accounts. You will be separately insured up to $250,000 for the funds in the IRA, because IRAs are in a different account ownership category.
Use the FDIC’s online Electronic Deposit Insurance Estimator (EDIE) to calculate how much of your funds are covered by deposit insurance.
Protecting Depositors During a Bank Failure
Bank failures are unlikely, but they do happen. FDIC deposit insurance protects your insured deposits if your bank closes. The FDIC acts quickly when this happens to ensure that access to your insured deposits is not interrupted.
Questions About Deposit Insurance?
Last Updated: April 1, 2024
FAQs
The standard maximum deposit insurance amount is $250,000 per depositor, per insured bank, for each account ownership category. The FDIC insures deposits that a person holds in one insured bank separately from any deposits that the person owns in another separately chartered insured bank.
What is the formula for deposit insurance? ›
Deposit insurance premiums are calculated by multiplying the balance of eligible deposits (average daily balance for business days) under the deposit insurance system in the previous fiscal year by the insurance premium rate (Articles 51 and 51-2 of the Deposit Insurance Act).
How does deposit insurance work? ›
The role of deposit insurance is to stabilize the financial system in the event of bank failures by assuring depositors they will have immediate access to their insured funds even if their bank fails, thereby reducing their incentive to make a "run" on the bank.
Can I have more than $250000 of deposit insurance coverage at one FDIC-insured bank? ›
Q: Can I have more than $250,000 of deposit insurance coverage at one FDIC-insured bank? A: Yes. The FDIC insures deposits according to the ownership category in which the funds are insured and how the accounts are titled.
Should you keep more than 250k in one bank? ›
Bottom line. Any individual or entity that has more than $250,000 in deposits at an FDIC-insured bank should see to it that all monies are federally insured. It's not only diligent savers and high-net-worth individuals who might need extra FDIC coverage.
Does FDIC cover $500,000 on a joint account? ›
This is their only account at this IDI and it is held as a “joint account with right of survivorship.” While they are both alive, they are fully insured for up to $500,000 under the joint account category.
What are three things not insured by FDIC? ›
FDIC does NOT insure non-deposit investment products, such as stocks, bonds, government and municipal securities, mutual funds, annuities (fixed and variable), life insurance policies (whole and variable), savings bonds, crypto assets, etc.
Are treasury bills insured by FDIC? ›
The FDIC does not insure U.S. Treasury bills, bonds or notes, but these investments are backed by the full faith and credit of the United States government.
Who is considered to be a depositor under the FDIC? ›
Depositors that may qualify to receive FDIC deposit insurance coverage include natural persons, legal entities such as corporations, partnerships, and unincorporated associations, and public units such as cities and counties.
What are the disadvantages of deposit insurance? ›
By promoting increased asset risk, deposit insurance leads to the increased likelihood and severity of banking crises. Banks are more likely to make riskier investments that would not be feasible without the safety net protections that deposit insurance provides.
The standard insurance amount is $250,000 per depositor, per insured bank, for each ownership category. This means that by having accounts in different ownership categories, like single accounts and joint accounts, you can get more than $250,000 in coverage.
What is the FDIC for dummies? ›
If your federally insured bank fails, Federal Deposit Insurance Corp. insurance keeps your money safe. The FDIC insures up to $250,000 per depositor, per institution and per ownership category. FDIC insurance covers deposit accounts and other official items such as cashier's checks and money orders.
How do millionaires insure their money with FDIC? ›
Millionaires don't worry about FDIC insurance. Their money is held in their name and not the name of the custodial private bank. Other millionaires have safe deposit boxes full of cash denominated in many different currencies.
Should I have multiple bank accounts for FDIC insurance? ›
The FDIC refers to these diferent categories as “ownership categories.” This means that a bank customer who has multiple accounts may qualify for more than $250,000 in insurance coverage, if the customer's funds are deposited in diferent ownership categories and the requirements for each ownership category are met.
Does adding a beneficiary increase FDIC coverage? ›
Naming beneficiaries on a retirement account does not increase deposit insurance coverage. Coverdell Education Savings Accounts (formerly known as an Education IRAs), Health Savings Accounts, and Medical Savings Accounts are not included in this ownership category and are not eligible for the increased coverage.
How to safely store deposits if you have more than $250000? ›
How to Insure Bank Deposits Over $250,000
- Open an Account at a Different Bank. FDIC coverage limits are per bank. ...
- Add a Joint Account Owner. ...
- Split Funds Between Ownership Categories. ...
- Use a Network Bank.
Here are four ways you may be able to insure more than $250,000 in deposits:
- Open accounts at more than one institution. This strategy works as long as the two institutions are distinct. ...
- Open accounts in different ownership categories. ...
- Use a network. ...
- Open a brokerage deposit account.
If your federally insured bank fails, Federal Deposit Insurance Corp. insurance keeps your money safe. The FDIC insures up to $250,000 per depositor, per institution and per ownership category. FDIC insurance covers deposit accounts and other official items such as cashier's checks and money orders.
