Orlando Harmon
The Federal Deposit Insurance Corporation (FDIC) insures bank accounts to protect customers in the event of a bank failure. FDIC insurance covers deposit accounts and other official items such as cashier’s checks and money orders. FDIC-insured accounts include checking accounts, savings accounts, money market deposit accounts, and certificates of deposit. The insurance covers up to $250,000 per depositor, per institution, and per ownership category. For example, a single account is insured up to $250,000, while a joint account with two owners is insured up to $500,000. Additionally, credit unions are insured by the National Credit Union Association (NCUA), which provides similar coverage to the FDIC.
| Characteristics | Values |
|---|---|
| Account Type | Checking accounts, savings accounts, money market deposit accounts, certificates of deposit, retirement accounts, business accounts, trust accounts |
| Insurer | Federal Deposit Insurance Corporation (FDIC), National Credit Union Share Insurance Fund (NCUSIF), Depositors Insurance Fund (DIF) |
| Insured Amount | Up to $250,000 per depositor, per insured bank, per ownership type; $500,000 for joint accounts; $750,000 for revocable trust accounts with three beneficiaries |
| Insured Items | Principal and interest, cashier's checks, money orders |
| Insurer Type | Government agency, private insurance fund |
| Insurer Requirements | FDIC-insured banks must display the FDIC logo on their website; Credit unions must be members of the National Credit Union Administration (NCUA) |
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What You'll Learn
FDIC insurance covers up to $250,000 per depositor
The Federal Deposit Insurance Corporation (FDIC) insures up to $250,000 per depositor, per FDIC-insured bank, for each account ownership category. FDIC insurance covers the principal and interest of an account, not exceeding the $250,000 limit. FDIC insurance coverage is automatic when you open a deposit account at an FDIC-insured bank. You can confirm that your bank is insured by searching for it in the BankFind tool available on the FDIC website or by calling the FDIC at 1-877-ASK-FDIC (1-877-275-3342).
FDIC deposit insurance covers $250,000 per depositor, per insured bank, for each account ownership category. This means that if you have a single ownership account at an FDIC-insured bank and 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 accounts at different FDIC-insured banks, the $250,000 limit applies at each bank, per depositor, for each account ownership category. To calculate your specific insurance coverage amount, you can use the Electronic Deposit Insurance Estimator (EDIE) available on the FDIC website. It's important to note that FDIC insurance does not cover all types of accounts and there are certain exclusions, such as investment products, cryptocurrencies, and safe deposit boxes.
To get around FDIC limits, you can spread your money across multiple banks or utilize bank networks that automatically distribute your excess deposits to maximize FDIC protection. These networks work with numerous banks to ensure your money is adequately covered. Some financial institutions also offer expanded FDIC insurance through their partner bank networks.
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Joint accounts are insured up to $500,000
The Federal Deposit Insurance Corporation (FDIC) insures up to $250,000 per depositor, per insured bank, and per ownership category. This includes principal and interest. However, FDIC insurance does not cover all types of accounts or banks. Investment products like stocks, bonds, and mutual funds are not covered, nor are cryptocurrencies, the contents of safe deposit boxes, life insurance policies, annuities, or municipal securities.
FDIC insurance coverage applies to several ownership categories, including single accounts, joint accounts, certain retirement accounts, revocable trust accounts, and business accounts. Single, individually-owned accounts are insured up to $250,000 total at FDIC-member banks. Joint accounts, on the other hand, are insured up to $500,000 total. This means that each co-owner is insured up to $250,000 per owner. So, for example, a married couple with a joint account of $250,000 and another eligible account of $200,000 would have both accounts covered, as their combined value falls under the $500,000 limit for joint accounts.
To insure amounts above $250,000, there are several options. One way is to open an account at a second FDIC-member bank. Another option is to use bank networks that automatically distribute excess deposits across multiple banks to ensure maximum FDIC protection, such as IntraFi Network Deposits or Impact Deposits Corp. Additionally, similar to the FDIC, the National Credit Union Share Insurance Fund insures up to $250,000 per person, per institution, per ownership category at credit unions with National Credit Union Administration membership. The Depositors Insurance Fund (DIF) is another private insurance fund that insures deposit amounts beyond what the FDIC covers, but it is only offered by about 70 banks based in Massachusetts.
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Retirement accounts are insured separately
The FDIC considers retirement accounts to be a separate "ownership category," which means that they are insured separately from other types of accounts, such as checking or savings accounts. This allows individuals to have more than $250,000 in total deposit insurance coverage at a single bank. For example, an individual could have $250,000 in a single account, $250,000 in a joint account, and $250,000 in a retirement account at the same bank, for a total of $750,000 in coverage.
It is important to note that the $250,000 limit for retirement accounts applies to each FDIC-insured bank. This means that an individual could have retirement accounts at multiple FDIC-insured banks and be covered by the $250,000 limit at each institution. Additionally, naming beneficiaries on IRAs does not increase the deposit insurance coverage. However, when an IRA owner dies, the decedent's IRA is insured separately from the beneficiary's own IRA at the same bank, up to $250,000.
While the FDIC provides insurance for most bank accounts, it does not cover all types of accounts. Investment products like stocks, bonds, and mutual funds are not covered, even if they are purchased through a bank. The FDIC also does not insure cryptocurrencies, safe deposit box contents, life insurance policies, annuities, or municipal securities. To maximize FDIC coverage, individuals can spread their money across multiple banks or utilize bank networks that automatically distribute deposits across partner banks.
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Credit unions are insured by the NCUA
Credit unions are insured by the National Credit Union Administration (NCUA), a federal agency created by Congress to regulate credit unions and insure members' money. The NCUA insurance guarantees that members receive the money they are entitled to from their deposit account if the credit union fails. The NCUA insurance covers up to $250,000 per person, per institution, per ownership category, similar to the Federal Deposit Insurance Corporation (FDIC) coverage for banks.
The NCUA insurance covers various types of accounts, including checking, savings, and money market accounts, as well as certificates of deposit. It is important to note that the NCUA does not insure investment products like stocks, bonds, mutual funds, life insurance policies, annuities, or municipal securities, even if they are sold at a federally insured credit union.
To confirm that a credit union is federally insured, members can use the NCUA's Credit Union Locator tool and look for the official NCUA insurance sign displayed at each teller station. The NCUA also provides a Share Insurance Estimator to help members calculate the amount of coverage their insured funds have at a federally insured credit union.
While credit union failure is rare, the NCUA works to protect members' deposits. If a credit union fails, the NCUA will try to sell its deposits and loans to another credit union. If necessary, the NCUA will send customers a check for the insured balance of their deposits, ensuring that no one loses their insured money.
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Excess deposits can be insured through bank networks
The Federal Deposit Insurance Corporation (FDIC) insures deposits placed in savings accounts, money market accounts, checking accounts, and certificates of deposit (CDs) up to a limit of $250,000 per depositor, per FDIC-insured bank, and per ownership category. This limit applies to the total amount of money deposited in a single account ownership category, such as single accounts, joint accounts, retirement accounts, and business accounts.
If you have excess deposits that exceed the FDIC insurance limit, you can consider the following options to ensure your funds are adequately protected:
Bank Networks
Bank networks, such as IntraFi Network Deposits and Impact Deposits Corp., can help spread your excess deposits across multiple FDIC-insured banks, providing maximum coverage. These services work with thousands of banks and automatically distribute your funds to ensure they are insured. For example, SoFi Bank provides up to $2 million in protection by distributing deposits across its partner banks.
Credit Unions
Credit unions, insured by the National Credit Union Share Insurance Fund (NCUSIF) and backed by the National Credit Union Administration (NCUA), offer similar protection to FDIC-insured banks. Credit unions often provide higher interest rates on deposits and lower fees compared to traditional banks.
Brokerage Accounts
Brokerage accounts, such as cash management accounts, can function like checking accounts and allow you to insure excess deposits by spreading your funds across multiple FDIC-insured banks.
CDARS (Certificate of Deposit Account Registry Service)
CDARS is a network of banks that can help insure millions of dollars for CD savers. By investing with a CDARS network member, your money is divided into CDs issued by different CDARS banks, each protected by the $250,000 FDIC insurance limit.
Depositors Insurance Fund (DIF)
The DIF is a private insurance fund that provides unlimited insurance above FDIC limits for Massachusetts residents or those banking with Massachusetts-based institutions.
By utilising these options, you can ensure that your excess deposits are adequately insured and protected, providing you with peace of mind and financial security.
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Frequently asked questions
Yes, your personal checking account is insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000.
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.
To find out if your bank is FDIC-insured, you can search for your bank on the FDIC's BankFind tool, or look for the FDIC insurance logo on the bank's website.
The National Credit Union Share Insurance Fund, administered by the National Credit Union Administration (NCUA), insures accounts at credit unions. FDIC insurance is for bank accounts, while NCUA insurance is for credit union accounts.
