Key Points
- FDIC deposit insurance protects money in deposit accounts at FDIC-insured banks if the bank fails, up to $250,000 per depositor, per bank, for each account ownership category.
- Checking, savings, money market deposit accounts and CDs are covered; stocks, bonds, mutual funds, annuities, crypto assets and safe deposit box contents are not.
- Coverage is automatic when you open a deposit account at an insured bank, and it includes principal plus accrued interest through the date of a failure.
- Since April 1, 2024, trust accounts are insured at $250,000 per beneficiary, capped at $1,250,000 per owner at the same bank.
- The FDIC says no depositor has lost a penny of FDIC-insured funds since it began operating in 1934; credit unions have a parallel $250,000 federal system run by the NCUA.
What is FDIC insurance? It is federal deposit insurance that protects the money you keep in checking, savings and other deposit accounts if your bank fails. The Federal Deposit Insurance Corporation (FDIC), an independent agency created by Congress, insures deposits up to at least $250,000 per depositor, per FDIC-insured bank, for each account ownership category. You do not have to sign up or pay for it, and the FDIC says no depositor has lost a penny of insured funds since the agency was founded.
The limit is not simply $250,000 per person, not every product sold at a bank is covered, and the way an account is titled can change how much protection you have. This guide explains what FDIC insurance covers, what it does not, how the limits work, what happens when a bank fails and how credit union insurance compares. It is educational only and is not financial advice.
What is the FDIC, and why does deposit insurance exist?
The FDIC was founded in 1933 and began operations in 1934. Its job, in its own words, is to maintain stability and public confidence in the nation’s financial system. Insuring deposits is one of the main ways it does that, and the FDIC official sign on bank teller windows has served as a symbol of that protection since 1934.
The FDIC is a different agency from the U.S. Federal Reserve. Deposit insurance and the handling of failed banks are the FDIC’s role.
How FDIC deposit insurance is funded
The FDIC pays insured depositors out of the Deposit Insurance Fund (DIF). According to the FDIC’s guide to understanding deposit insurance, the fund has two sources of money: assessments, which are insurance premiums that FDIC-insured banks pay, and interest earned on funds invested in U.S. government obligations such as Treasury notes. The DIF is also backed by the full faith and credit of the United States government.
In other words, insured banks pay the premiums. The FDIC says depositors do not need to apply for or purchase deposit insurance; coverage is automatic whenever a deposit account is opened at an FDIC-insured bank.
What does FDIC insurance cover?
FDIC insurance covers deposits, and only at banks that are FDIC-insured. The FDIC lists these deposit products as covered:
- Checking accounts
- Negotiable order of withdrawal (NOW) accounts
- Savings 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
Coverage includes both the principal and any accrued interest through the date the bank fails, up to the limit. The FDIC gives an example: a customer with a CD in her name alone holding $195,000 in principal and $3,000 in accrued interest would have the full $198,000 insured.
What FDIC insurance does not cover
Many products sold at or through a bank are investments, not deposits, and the FDIC does not insure them even when an FDIC-insured bank offers them. The FDIC’s list of products that are not covered includes:
- Stock investments
- Bond investments
- Mutual funds
- Annuities
- Life insurance policies
- Safe deposit boxes or their contents
- U.S. Treasury bills, bonds or notes
- Municipal securities
- Crypto assets
Treasury securities are a special case. The FDIC notes that they are not FDIC-insured, but they are backed by the full faith and credit of the U.S. government. Funds that hold stocks or bonds, such as exchange-traded funds and mutual funds, can lose value, and FDIC insurance does not protect against market losses.
FDIC insurance also protects only against the failure of an insured bank. The FDIC says it does not protect against losses due to theft or fraud, which are addressed by other laws. It also does not cover the default or bankruptcy of a company that is not an FDIC-insured bank.
How the $250,000 limit really works
The standard insurance amount is $250,000 per depositor, per FDIC-insured bank, for each account ownership category.
Per depositor
The limit applies to each person or entity, not to each account. The FDIC adds together all of your deposits in the same ownership category at the same bank. Opening several single-name accounts at one bank does not multiply your coverage.
Per bank
Coverage is separate at each FDIC-insured bank. If you have a single ownership account at one insured bank and another at a different insured bank, each is insured up to $250,000.
Per ownership category
The FDIC insures deposits differently depending on how they are owned. Its ownership categories include single accounts, joint accounts, certain retirement accounts such as IRAs, trust accounts, employee benefit plan accounts, business accounts (corporations, partnerships and unincorporated associations) and government accounts. Money in different categories at the same bank is insured separately.
The FDIC’s own example: if you have a checking account and a savings account in your name alone plus an IRA at the same bank, the two single accounts are added together and insured up to $250,000, and the IRA is insured separately up to $250,000.
Coverage limits by common account type
| Ownership category | FDIC coverage limit |
|---|---|
| Single accounts (one owner, no beneficiaries) | $250,000 per owner |
| Joint accounts (two or more owners, no beneficiaries) | $250,000 per co-owner |
| Certain retirement accounts, including IRAs | $250,000 per owner |
| Trust accounts (including POD/ITF, revocable and irrevocable trusts) | $250,000 per beneficiary, up to $1,250,000 per owner |
| Corporation, partnership and unincorporated association accounts | $250,000 per entity |
A few details are easy to miss:
- Joint accounts: to qualify, all owners must be living people, have equal rights to make withdrawals and sign the account signature card, unless the account is a CD. The FDIC says electronic signatures meet this requirement.
- Sole proprietorships: the FDIC treats deposits owned by a sole proprietorship as a single account of the business owner. In one FDIC example, a depositor with four single accounts at one bank, including one for her sole proprietorship, totaling $260,000, was insured for $250,000 and left $10,000 uninsured.
- Trust accounts: as of April 1, 2024, the FDIC uses one formula for trust accounts: number of owners times number of distinct beneficiaries times $250,000. The maximum for a trust owner with five or more beneficiaries is $1,250,000 per owner for all trust accounts at the same bank. For example, a revocable trust account with one owner naming three unique beneficiaries can be insured up to $750,000.
What happens if your bank fails?
When a bank fails, the FDIC acts in two roles.
First, as the insurer, it pays depositors their insured balances. In many cases another FDIC-insured bank acquires the failed bank, and customers simply access their money through the acquiring bank. When that does not happen, the FDIC says it historically pays insurance within a few days after a bank closing, usually the next business day, either by opening a new account for each depositor at another insured bank or by issuing a check for the insured balance. Some cases take longer, for example deposits over $250,000 linked to trust documents or deposits placed through a third-party broker, and the FDIC may ask for more information.
Second, as the receiver, the FDIC sells the failed bank’s assets and settles its debts, including claims for deposits above the insured limit. Depositors with uninsured funds may recover part of that money from asset sales, usually in periodic “cents on the dollar” payments, but the FDIC warns this can take several years.
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How to check whether your money is insured
- Confirm the bank: search for your bank in the FDIC’s BankFind tool, or call 1-877-ASK-FDIC (1-877-275-3342).
- Confirm the product: ask whether an account is a deposit or an investment. Only deposit products are covered.
- Estimate your coverage: the FDIC’s Electronic Deposit Insurance Estimator (EDIE) calculates how much of your money is insured based on your accounts and ownership categories.
- Review titles and beneficiaries: how an account is titled, and who is named on it, decides its ownership category and therefore its limit.
Deposit insurance is only one layer of financial protection. It does not stop identity thieves from opening new accounts in your name; tools such as placing a credit freeze address that separate risk.
FDIC vs. NCUA: what about credit unions?
Credit unions are not covered by the FDIC. Instead, the National Credit Union Administration (NCUA) runs the National Credit Union Share Insurance Fund, which Congress established in 1970. According to the NCUA’s share insurance coverage page, the fund insures individual accounts at federally insured credit unions up to $250,000, insures a member’s interest in all joint accounts combined up to $250,000 and separately protects IRA and Keogh retirement accounts up to $250,000. Like the FDIC fund, it is backed by the full faith and credit of the United States, and the NCUA says no one has lost a single penny of insured deposits at a federally insured credit union.
There is one important difference to check. The NCUA notes that several state-chartered credit unions are insured by private insurers, and that coverage is not backed by the full faith and credit of the United States. Federally insured credit unions must display the official NCUA sign, and members can confirm their credit union’s status with the NCUA’s Credit Union Locator. As with banks, NCUA insurance does not cover investment products, safe deposit boxes or digital assets such as cryptocurrencies.
The bottom line
FDIC insurance is automatic, free to depositors and backed by the U.S. government, but it has clear edges. It covers deposits, not investments. It protects up to $250,000 per depositor, per bank, per ownership category, so where and how you title your accounts determines how much of your money is protected. If your balances approach the limit, the FDIC’s own tools, BankFind and EDIE, let you confirm your bank and estimate your coverage in minutes.
Sources
- Federal Deposit Insurance Corporation, Understanding Deposit Insurance (fdic.gov, last updated April 1, 2024)
- Federal Deposit Insurance Corporation, Are My Deposit Accounts Insured by the FDIC? (fdic.gov, last updated April 1, 2024)
- Federal Deposit Insurance Corporation, Deposit Insurance At A Glance (fdic.gov brochure, last updated April 1, 2024)
- Federal Deposit Insurance Corporation, Deposit Insurance FAQs (fdic.gov)
- National Credit Union Administration, Share Insurance Coverage (ncua.gov)
