Orlando Harmon
The Federal Deposit Insurance Corporation (FDIC) insures bank deposits up to $250,000 per depositor, per bank, and per ownership category. This insurance covers traditional deposit accounts, including checking and savings accounts, money market deposit accounts, NOW accounts, certificates of deposit (CDs), cashier's checks, and money orders. However, it does not cover investment products, mutual funds, stocks, bonds, cryptocurrencies, or the contents of safe deposit boxes. For those with deposits exceeding $250,000, there are several options to insure their funds, including opening accounts at multiple FDIC-insured banks, utilising cash management accounts, or exploring alternative insurance options like credit unions.
| Characteristics | Values |
|---|---|
| FDIC coverage limit | $250,000 per depositor, per FDIC-insured bank, per ownership category |
| FDIC-insured accounts | Checking accounts, savings accounts, money market accounts, certificates of deposit (CDs), negotiable order of withdrawal (NOW) accounts, cashier's checks, money orders, retirement accounts, employee benefit plan accounts, trust accounts, business accounts, and government accounts |
| FDIC-insured institutions | Majority of U.S. banks, online banks, and credit unions |
| FDIC-insured networks | IntraFi Network Deposits, Impact Deposits Corp., Certificate of Deposit Account Registry Service (CDARS), and Deposit Insurance Fund (DIF) |
| FDIC-insured account types | Single accounts, joint accounts, trust accounts, and business accounts |
| FDIC-insured protection | Funds are reimbursed up to the coverage limit in the event of bank failure |
| FDIC-insured coverage verification | Electronic Deposit Insurance Estimator (EDIE) or by calling the FDIC directly |
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What You'll Learn
Understand Federal Deposit Insurance Corporation (FDIC) limits
The Federal Deposit Insurance Corporation (FDIC) insures deposits up to a limit of $250,000 per depositor, per FDIC-insured bank, per ownership category. This limit has been the same for over a decade. FDIC insurance is backed by the full faith and credit of the United States government.
The FDIC was established as part of the Banking Act of 1933, signed by President Franklin D. Roosevelt. Although initiated by the US Congress in response to bank failures in the 1920s and 1930s, the FDIC is not government-funded. Its funds come from banks and other financial institutions that pay for deposit insurance.
FDIC deposit insurance covers traditional deposit accounts, including checking and savings accounts, money market deposit accounts, NOW accounts, certificates of deposit (CDs), cashier's checks, and money orders. It does not cover investment products like stocks, bonds, mutual funds, cryptocurrencies, or the contents of safe deposit boxes.
The FDIC provides deposit insurance automatically for any deposit account opened at an FDIC-insured bank, and depositors do not need to apply for it. To verify your coverage, you can use the FDIC's Electronic Deposit Insurance Estimator (EDIE) online or call the FDIC directly.
If you have deposits in multiple account categories at the same FDIC-insured bank, your insurance coverage may exceed $250,000. For example, if you have a single ownership account and a joint ownership account at the same bank, you will be insured for up to $250,000 for your single ownership account deposits and separately for up to $250,000 for your joint ownership account deposits. Similarly, if you have accounts at different FDIC-insured banks, the $250,000 limit applies at each bank.
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$22.83 $25.95
Utilise cash management accounts
Cash management accounts (CMAs) are a type of deposit account offered by online-only institutions that aren't technically banks, such as robo-advisors. They are a hybrid of checking and savings accounts with increased FDIC insurance. CMAs are typically offered by brokerages and can be a solid companion to an investment account. They are a good place to keep your uninvested cash.
CMAs offer a variety of features, including debit card access, competitive interest rates, ATM fee reimbursements, early direct deposit, mobile check deposit, check writing, bill pay, money transfers, and more. Some CMAs have annual percentage yields that are higher than what most brick-and-mortar banks offer. For example, the Wealthfront Cash Account has a 4.00% APY.
Fintech companies that offer CMAs partner with banks that provide FDIC insurance. Some fintechs are backed by multiple banks, so your CMA may be FDIC-insured for $1 million or more. CMAs often have extended federal insurance coverage through programs where fintechs partner with multiple FDIC-insured banks, which is referred to as pass-through deposit insurance coverage.
The Fidelity Cash Management Account is an example of a CMA that offers FDIC insurance. The FDIC-insured Deposit Sweep program option sweeps your uninvested cash into an FDIC-insured interest-bearing account at one or more program banks. Deposits swept into the program bank(s) are eligible for FDIC insurance, subject to FDIC insurance coverage limits, and amounts over FDIC coverage limits may be swept to a money market fund.
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Explore private deposit insurance
The Federal Deposit Insurance Corporation (FDIC) insures deposits up to a limit of $250,000 per depositor, per FDIC-insured bank, per ownership category. This includes single accounts, certain retirement accounts, employee benefit plan accounts, joint accounts, trust accounts, business accounts, and government accounts. FDIC insurance covers traditional deposit accounts, and depositors do not need to apply for it. Coverage is automatic when a deposit account is opened at an FDIC-insured bank or financial institution.
However, FDIC insurance does not cover investment products like stocks, bonds, mutual funds, cryptocurrencies, the contents of safe deposit boxes, life insurance policies, annuities, or municipal securities.
If you are looking for ways to insure deposits beyond the FDIC limit, there are a few options available:
- Extended Coverage Sweep: This is a fully automated cash management account offered by First Business Bank. It provides up to $50 million in aggregate FDIC protection through a single account and a network of FDIC-insured institutions.
- Certificate of Deposit Account Registry Service (CDARS): This service works to protect your assets above $250,000.
- Bank Networks: IntraFi Network Deposits and Impact Deposits Corp. are examples of bank networks that can help spread excess deposits across multiple FDIC-insured banks for maximum coverage.
- Credit Unions: Some state-chartered credit unions offer additional private insurance above the federal limit. However, you need to become a credit union member to open a deposit account.
- Brokerage Accounts: Major brokerage firms like Fidelity or Charles Schwab offer certain FDIC-insured deposit accounts, including bank accounts, cash management accounts, and health savings accounts. These programs automatically spread your money across multiple partner banks, each providing $250,000 in FDIC coverage.
While these options can provide additional protection for your deposits, it is important to carefully consider the risks and regulations associated with each option before making any decisions.
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Spread deposits across multiple banks
The Federal Deposit Insurance Corporation (FDIC) insures deposits up to a limit of $250,000 per depositor, per FDIC-insured bank, per ownership category. This limit has been the same for over a decade. FDIC insurance covers traditional deposit accounts, and depositors do not need to apply for it. Coverage is automatic whenever a deposit account is opened at an FDIC-insured bank or financial institution.
If you have more than $250,000 in deposits at an FDIC-insured bank, you should ensure that all your monies are federally insured. The simplest approach is to spread your money across several FDIC-insured banks or use different account ownership categories at your current bank.
Major brokerage firms like Fidelity or Charles Schwab offer certain FDIC-insured deposit accounts, including bank accounts, cash management accounts, and health savings accounts. Many of these programs automatically spread your money across multiple partner banks, each providing $250,000 in FDIC coverage.
Bank networks, such as IntraFi Network Deposits and Impact Deposits Corp., can help spread excess deposits across multiple FDIC-insured banks for maximum coverage. IntraFi Network Deposits, for example, will spread your money across thousands of banks to ensure you're adequately covered. Similarly, Impact Deposits Corp. offers insurance protection for excess deposits through its network of almost 200 FDIC-insured community banks.
Some financial institutions offer expanded FDIC insurance through their own partner bank networks. For example, SoFi Bank provides up to $2 million in protection by automatically distributing deposits across its network of partner banks.
For Massachusetts residents or those banking with Massachusetts-based institutions, the Depositors Insurance Fund (DIF) offers unlimited insurance above FDIC limits. This program requires no paperwork or special account structuring – any amount above the FDIC’s $250,000 limit is automatically protected at member banks.
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Choose the right account types
Choosing the right type of account is crucial to ensuring your bank deposits are insured. The Federal Deposit Insurance Corporation (FDIC) insures deposits placed in various accounts, including savings accounts, money market accounts, checking accounts, and certificates of deposit (CDs). Each of these accounts is protected up to a limit of $250,000 per depositor, per FDIC-insured bank, and per ownership category.
Single accounts, owned by one person, are insured up to $250,000 in total at each bank. This includes individual retirement accounts (IRAs), which are also insured separately up to $250,000. Business accounts are also covered up to $250,000, independent of any personal accounts held at the same bank.
Joint accounts, with two or more owners, offer double the insurance coverage. Each co-owner is insured up to $250,000, resulting in a total coverage of $500,000 for the joint account.
To maximize your insurance coverage, you can consider opening multiple accounts with different ownership categories, such as joint accounts or trusts. Additionally, you can spread your deposits across multiple FDIC-insured banks to ensure your money is adequately covered. This can be achieved through bank networks like IntraFi Network Deposits and Impact Deposits Corp., which distribute your deposits across their partner banks.
It is important to note that FDIC insurance does not cover all types of accounts or financial products. Investment products like stocks, bonds, mutual funds, cryptocurrencies, and insurance policies are not insured by the FDIC. Therefore, choosing the right type of account that falls under FDIC coverage is essential to ensure your deposits are protected.
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Frequently asked questions
The Federal Deposit Insurance Corporation (FDIC) insures deposits up to $250,000 per depositor, per bank, per ownership category.
FDIC insurance covers traditional deposit accounts, including checking accounts, savings accounts, money market deposit accounts, NOW accounts, certificates of deposit (CDs), cashier’s checks, and money orders.
FDIC insurance does not cover investment products like stocks, bonds, mutual funds, cryptocurrencies, the contents of safe deposit boxes, life insurance policies, annuities, or municipal securities.
You can insure deposits over the FDIC limit by opening a new account at a different FDIC-insured bank, adding beneficiaries to your account, or opening a joint account. You can also use services like IntraFi Network Deposits or Impact Deposits Corp. to spread your deposits across multiple FDIC-insured banks.
You can verify your FDIC coverage by using the FDIC's Electronic Deposit Insurance Estimator (EDIE) or by calling the FDIC directly at 877-ASK-FDIC (877-275-3342).
