Alyssa Lane
Bank savings accounts are insured by the Federal Deposit Insurance Corporation (FDIC), an independent agency of the US government. The FDIC insures deposits in the event of a bank failure, protecting customers against the loss of up to USD 250,000 per depositor, per bank, per ownership category. This includes principal and any accrued interest. FDIC insurance is a safety net for customers, ensuring that their deposits are protected and promptly accessible even if a bank fails.
| Characteristics | Values |
|---|---|
| Account Type | Savings accounts |
| Insurer | Federal Deposit Insurance Corporation (FDIC) |
| Coverage | Up to $250,000 per depositor, per bank, per ownership category |
| Coverage Includes | Principal and accrued interest |
| Coverage Excludes | Stocks, bonds, money market funds, cryptocurrency, safe deposit boxes, annuities, insurance products |
| Verification | FDIC BankFind tool, Electronic Deposit Insurance Estimator (EDIE) |
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What You'll Learn
What is FDIC insurance?
The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the US government that protects and reimburses your deposits up to the legal limit of $250,000 if your FDIC-insured bank fails. The FDIC was created by the Banking Act of 1933, enacted during the Great Depression to restore trust in the American banking system. More than one-third of banks failed in the years before the FDIC's creation, and bank runs were common. The FDIC insurance covers checking, savings, and other deposit accounts up to a standard amount of $250,000, but there are a few caveats.
FDIC insurance covers the principal and interest of an account, not exceeding the $250,000 limit. The FDIC doesn't insure all types of accounts. Financial instruments, such as stocks, bonds, money market funds, cryptocurrency, US Treasury securities (T-bills), safe deposit boxes, annuities, and insurance products aren't insured by the FDIC. The FDIC also doesn't insure regular shares and share draft accounts of credit unions. Like the FDIC, the National Credit Union Share Insurance Fund, administered by the National Credit Union Administration (NCUA), insures accounts at credit unions.
FDIC insurance is backed by the full faith and credit of the government of the United States, and according to the FDIC, "since its start in 1933, no depositor has ever lost a penny of FDIC-insured funds". The FDIC provides deposit insurance to protect your money in the event of a bank failure. Your deposits are automatically insured up to $250,000 at each FDIC-insured bank. FDIC deposit insurance protects money you hold at an FDIC-insured bank in traditional deposit accounts, including certificates of deposit (CDs). Coverage is automatic when you open one of these types of accounts at an FDIC-insured bank.
The FDIC doesn't cover all types of banks. To qualify for deposit insurance, member banks must follow certain liquidity and reserve requirements. Banks are classified into five groups according to their risk-based capital ratio. When a bank becomes critically undercapitalized, the chartering authority closes the institution and appoints the FDIC as the receiver of the bank. The FDIC insures deposits at member banks in the event that a bank fails—that is, the bank's regulating authority decides that it no longer meets the requirements for remaining in business.
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How much does FDIC insurance cover?
The Federal Deposit Insurance Corporation (FDIC) guarantees bank customers against loss of up to $250,000 if their bank or thrift institution fails. The FDIC covers the principal and interest of an account, not exceeding the $250,000 limit. This limit applies per depositor, per insured bank, for each account ownership category.
For example, if you have a savings account with a balance of $50,000 and a CD with $150,000, both accounts are insured as they fall under $250,000. If you and your spouse have a joint account with a $250,000 balance and $200,000 in another eligible account, both accounts are covered as their combined value falls under the $250,000 per co-owner rule.
FDIC insurance covers checking, savings, and other deposit accounts up to a standard amount of $250,000. However, it does not cover all types of accounts. Financial instruments such as stocks, bonds, money market funds, cryptocurrency, safe deposit boxes, annuities, and insurance products are not insured by the FDIC.
If you are banking over $250,000, you can get another $250,000 insured by opening an account at a second FDIC member bank.
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What accounts are covered by FDIC insurance?
The Federal Deposit Insurance Corporation (FDIC) insures bank customers against losses of up to $250,000 if their bank or thrift institution fails. This insurance covers deposit accounts and other official items such as cashier's checks and money orders. FDIC insurance covers the following deposit accounts:
- Checking accounts
- Savings accounts
- Money market deposit accounts
- Certificates of deposit (CDs)
- Negotiable order of withdrawal accounts
FDIC insurance covers single accounts, certain retirement accounts, employee benefit plan accounts, joint accounts, trust accounts, business accounts, and government accounts. The coverage limit for single accounts is $250,000 per account owner, and for joint accounts, it is $250,000 per co-owner. For example, a couple with a joint checking account that's FDIC-insured can receive insurance for up to $500,000 for the same shared account ($250,000 per co-owner).
It is important to note that FDIC insurance does not cover all types of accounts. Investment options, such as stocks, bonds, mutual funds, money market funds, cryptocurrency, U.S. Treasury securities (T-bills), annuities, and insurance products, are not insured by the FDIC. Additionally, the FDIC does not insure regular shares and share draft accounts of credit unions; these are insured by the National Credit Union Share Insurance Fund, administered by the National Credit Union Administration (NCUA).
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What happens if my bank fails?
Bank failures are rare, but they can happen, typically when a bank is no longer able to cover its liabilities. When this occurs, customers' assets are put in jeopardy. However, if your bank fails, there are measures in place to protect your deposits. Here's what you need to do and what you can expect:
Firstly, it's important to understand the role of the Federal Deposit Insurance Corporation (FDIC). The FDIC is an independent agency of the U.S. government that protects you against the loss of your deposits up to a certain limit. The standard FDIC insurance amount is $250,000 per depositor, per insured bank, per account ownership category. This means that if you have multiple accounts at the same bank, the total coverage is still $250,000. However, if you have accounts at different banks, the $250,000 limit applies to each bank. FDIC insurance covers checking, savings, and other deposit accounts, but it does not cover all types of accounts or financial institutions. For example, if you have money deposited in a credit union, it is insured by the National Credit Union Administration (NCUA), not the FDIC.
In the unlikely event of a bank failure, the FDIC acts quickly to ensure that all depositors get prompt access to their insured deposits. In many cases, a failed bank is acquired by another FDIC-insured bank, allowing customers to access their money through the acquiring bank. If a failed bank is not acquired, the FDIC will identify all customers, calculate their deposit insurance coverage, and provide their money to them as soon as possible. Since 1934, no depositor has lost any of their FDIC-insured funds.
To check if your bank is FDIC-insured, you can use the FDIC's BankFind tool on their website or give them a call. When opening a new bank account, you can also ask a banker about FDIC protection. If your bank is FDIC-insured, you can rest assured that your deposits are protected up to the legal limit. However, it's important to note that FDIC insurance does not protect against losses due to theft or fraud, which are addressed by other laws.
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How do I know if my bank is FDIC-insured?
Nearly all banks are insured by the FDIC, which protects your deposits up to $250,000 (per person, bank, and account type). FDIC-insured banks typically have signage identifying themselves as FDIC members and include this information in their marketing materials. You can also call your bank directly and ask if your accounts are FDIC-insured.
You can also use the FDIC's online tools to check if your bank is FDIC-insured. The FDIC BankFind Suite tool allows you to search for FDIC-insured institutions by entering the bank name, website URL, FDIC certificate ID, status of the bank, or city, state, or zip code. The FDIC also provides an online Electronic Deposit Insurance Estimator to help you find information about your insured deposits. Additionally, you can call the FDIC toll-free at (877) ASK-FDIC ((877) 275-3342) for assistance.
It is important to note that FDIC insurance covers a range of banking products, including checking, savings, and other deposit accounts. However, it does not cover all types of accounts and financial instruments such as stocks, bonds, money market funds, cryptocurrency, and safe deposit boxes. FDIC insurance is also limited to $250,000 per account owner, with some exceptions for joint accounts and accounts in different ownership categories.
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Frequently asked questions
Yes, bank savings accounts are insured by the Federal Deposit Insurance Corporation (FDIC), an independent agency of the U.S. government.
FDIC insurance covers eligible bank accounts for up to $250,000 for the principal and interest. This limit applies per depositor, per insured bank, and per account ownership category.
FDIC insurance protects bank account holders against loss if their bank fails. It was created during the Great Depression in 1933 to maintain public confidence in the banking system.
When you open a bank savings account, you may see a notice stating that the account is FDIC-insured. You can also use the FDIC's BankFind tool or contact the FDIC directly to confirm if your bank is insured.
Yes, the FDIC does not insure all types of accounts. Financial instruments such as stocks, bonds, money market funds, cryptocurrency, and insurance products are not covered by FDIC insurance.
