Paul Sanchez
The Federal Deposit Insurance Corporation (FDIC) insures most bank accounts, including savings accounts, in the United States. The FDIC was established in 1933 to promote public confidence in the banking system by insuring consumers' deposits up to a certain amount in the event of bank failure. Banks apply for FDIC insurance, and the insurance limit per depositor, per bank, and per ownership category is typically $250,000. While most banks are FDIC-insured, some are not, and customers should look for the FDIC logo or use the FDIC's BankFind tool to check.
| Characteristics | Values |
|---|---|
| What is FDIC? | Federal Deposit Insurance Corporation |
| Who does FDIC protect? | Consumers against the loss of their deposits in an FDIC-insured bank or savings association that fails |
| Who does FDIC not protect? | Share accounts at credit unions, regular shares and share draft accounts of credit unions |
| Who insures credit unions? | National Credit Union Share Insurance Fund, administered by the National Credit Union Administration (NCUA) |
| Who is FDIC? | An independent agency of the US government |
| Who created FDIC? | The federal government created the agency during the Depression in 1933 |
| What is the insurance limit? | $250,000 per depositor, per insured bank, for each account ownership category at a bank |
| What is the purpose of FDIC? | To promote public confidence in the banking system by insuring consumers' deposits |
| What does FDIC do when a bank fails? | The Federal Deposit Insurance Corporation protects deposit account customers' money up to the insurance limit. It also manages the failed bank's assets and debts |
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What You'll Learn
FDIC insurance and coverage
The Federal Deposit Insurance Corporation (FDIC) provides insurance for most bank accounts, although some banks do not have FDIC protection. FDIC insurance is backed by the full faith and credit of the United States Government. Banks apply for FDIC insurance, and it comes at a cost, but you don't pay a monthly fee. The bank pays the premiums. FDIC insurance covers depositors' accounts at each insured bank, including principal and any accrued interest through the date of the insured bank's failure, up to the insurance limit. The standard deposit insurance amount is $250,000 per depositor, per insured bank, for each account ownership category at a bank. All deposits a depositor has in the same ownership category at each insured bank are added together and insured up to $250,000. As of April 1, 2024, the maximum insurance coverage for a trust owner with five or more beneficiaries is $1,250,000 per owner for all trust accounts held at the same bank.
FDIC insurance covers various types of banking products, including checking accounts, negotiable order of withdrawal (NOW) accounts, savings accounts, money market deposit accounts (MMDA), and certificates of deposit (CDs). FDIC deposit insurance protects money you hold at an FDIC-insured bank in traditional deposit accounts. It 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. It also does not insure regular shares and share draft accounts of credit unions. Instead, these are insured by the National Credit Union Share Insurance Fund, administered by the National Credit Union Administration (NCUA).
FDIC insurance protects your assets in a bank account (checking or savings) at an insured bank. It is important to understand that the $250,000 limit applies to each FDIC-insured bank. This means an account holder could have deposit accounts at two or more FDIC-insured banks and be covered at each institution by a separate $250,000 limit. FDIC insurance is automatic when you open one of these types of accounts at an FDIC-insured bank. You can use the FDIC's Electronic Deposit Insurance Estimator (EDIE) to determine whether your accounts are fully insured at each insured bank where your deposits are held.
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SIPC insurance
The Securities Investor Protection Corporation (SIPC) is a nonprofit membership corporation that was created by federal statute in 1970. SIPC insurance protects your assets in a brokerage account. It works differently from FDIC insurance, which protects your assets in a bank account. SIPC insurance covers investors for up to $500,000 in securities, with up to $250,000 of that amount covering cash balances.
SIPC steps in when a brokerage firm fails financially and assets are missing from customer accounts. It works to restore investors' cash and securities, recovering billions of dollars for investors over the years. SIPC protection is provided under the Securities Investor Protection Act (SIPA), and the SIPC logo indicates that your assets are protected under this Act.
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FDIC-insured banks
The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the US government that provides deposit insurance to protect your money in the event of a bank failure. FDIC insurance is backed by the full faith and credit of the US government. Banks apply for FDIC insurance, and it comes at a cost, but customers do not pay a monthly fee.
FDIC insurance covers your assets in a bank account (checking or savings) at an insured bank. The standard deposit insurance amount is $250,000 per depositor, per insured bank, for each account ownership category at a bank. All deposits a depositor has in the same ownership category at each insured bank are added together and insured up to $250,000. This means an account holder could have deposit accounts at two or more FDIC-insured banks and be covered at each institution by a separate $250,000 limit. The FDIC provides separate insurance coverage for deposits held in different "ownership categories", so you may qualify for more than $250,000 in insurance coverage if you have funds deposited in different ownership categories and all FDIC requirements are met. For example, you can be eligible for $250,000 of coverage for funds held at a specific FDIC-insured bank in a single account, plus $250,000 in a joint account, plus $250,000 in a retirement account, for a total of $750,000 of coverage.
The FDIC does not insure all banks by default, and some banks do not have FDIC protection. Banks offer some financial products and services that are not deposits, and the FDIC does not insure them. The FDIC also doesn't insure regular shares and share draft accounts of credit unions. Instead, these are insured by the National Credit Union Share Insurance Fund, administered by the National Credit Union Administration (NCUA).
You can check if a bank is FDIC-insured by looking for the FDIC insurance logo on a bank’s website or by checking the FDIC’s BankFind tool.
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FDIC insurance limitations
The Federal Deposit Insurance Corporation (FDIC) insures deposits up to $250,000 per depositor, per FDIC-insured bank, per ownership category. This means that if you have multiple accounts at the same bank under the same ownership category, the FDIC will insure up to $250,000 across all those accounts. The FDIC provides separate insurance coverage for deposits held in different "ownership categories", so you may qualify for more than $250,000 in insurance coverage if you have funds deposited in different ownership categories. For example, you can be eligible for $250,000 of coverage for funds held at a specific FDIC-insured bank in a single account, plus $250,000 at that same bank in a joint account, plus $250,000 at that same bank in a retirement account, for a total of $750,000 of coverage.
It is important to note that FDIC insurance only applies to FDIC-insured banks, and not all banks are FDIC-insured by default. Banks apply for FDIC insurance, and it comes at a cost that is paid by the bank. You can confirm if your bank is FDIC-insured by searching for it in the BankFind tool available on the FDIC website or by looking for the FDIC insurance logo on the bank's website. Additionally, FDIC insurance only covers deposits and does not cover non-deposit investment products, even those offered by FDIC-insured banks. It also does not cover default or bankruptcy of any non-FDIC-insured institution.
FDIC deposit insurance is designed to protect your money in deposit accounts at FDIC-insured banks in the event of bank failure. It does not protect against losses due to theft or fraud, which are addressed by other laws. The FDIC acts quickly to ensure that all depositors get prompt access to their insured deposits in the event of a bank failure. The FDIC also provides insurance for prepaid cards that are registered with the card issuer when certain FDIC requirements are met. The funds underlying the prepaid cards must be deposited in a bank, and FDIC deposit insurance coverage only applies when a bank fails.
In summary, the FDIC provides insurance coverage for deposits up to $250,000 per depositor, per FDIC-insured bank, per ownership category, with the possibility of higher coverage for deposits in different ownership categories. It is important to confirm if your bank is FDIC-insured and to understand the limitations of FDIC insurance coverage.
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FDIC insurance and credit unions
The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the US government that insures deposits in banks and savings associations. FDIC insurance is not free, but customers do not pay for it; the bank pays the premiums. FDIC insurance covers up to \$250,000 per depositor, per insured bank, for each account ownership category at a bank.
Credit unions, on the other hand, are insured by the National Credit Union Administration (NCUA). The NCUA is also an independent federal agency that provides federal insurance for deposits at credit unions. Like FDIC insurance, NCUA insurance covers up to \$250,000 per depositor, per insured credit union, for each account ownership category.
Both the FDIC and NCUA were created to promote public confidence in the banking system. They provide government-backed deposit account insurance for consumers throughout the United States. In most cases, FDIC-insured banks and NCUA-insured credit unions are equally safe places to store your money.
It is important to note that FDIC insurance does not cover all types of accounts. For example, it does not cover stocks, bonds, mutual funds, or cryptocurrency investments. Additionally, FDIC insurance only applies to banks, not to non-bank financial institutions. Similarly, NCUA insurance only applies to credit unions.
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Frequently asked questions
It means that your money, up to a certain amount, is safe if your bank fails.
The FDIC is an independent agency of the US government that protects you against the loss of your deposits if your bank fails. The FDIC was created in 1933 to promote public confidence in the banking system.
The FDIC insures up to \$250,000 per depositor, per bank, per ownership category. This includes money deposited in deposit accounts such as savings accounts, checking accounts, and money market deposit accounts.
No, not all savings accounts are FDIC-insured. Banks aren't insured by default; they apply for FDIC insurance. Most, but not all, banking institutions are insured by the FDIC.
Banks will usually advertise this protection, or you can ask a banker directly. You can also look for the FDIC insurance logo on a bank's website or check the FDIC's BankFind tool.
