Jane Dotson
In the US, the Federal Deposit Insurance Corporation (FDIC) insures most bank accounts. The FDIC is an independent agency of the US government that protects consumers and their deposits in the event of bank failure. The FDIC covers traditional bank deposit products, including checking accounts, savings accounts, and money market deposit accounts, up to USD 250,000 per depositor, per insured financial institution, for each account ownership category. For Massachusetts residents or those banking with Massachusetts-based institutions, the Depositors Insurance Fund (DIF) offers unlimited insurance above FDIC limits.
| Characteristics | Values |
|---|---|
| Name of the institution | Federal Deposit Insurance Corporation (FDIC) |
| Who does it insure? | Individual depositors, joint accounts, corporations, partnerships, limited liability companies (LLCs), for-profit unincorporated associations, and not-for-profit organizations |
| What does it insure? | Checking accounts, savings accounts, negotiable orders of withdrawal (NOW), money market deposit accounts (MMDA), certificates of deposit (CD), cashier's checks, money orders, loan disbursement checks, interest checks, drafts |
| Maximum deposit insurance amount | $250,000 per depositor, per insured financial institution, per ownership category |
| Protection | Protects against loss if your bank or thrift institution fails |
| Insurance claim | Not required to file an insurance claim to recoup deposits |
| Insurance application | Not required when opening a bank account at an FDIC-insured institution |
| Payment | Pays depositors by giving them an account at another insured bank or issuing a check |
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What You'll Learn
The Federal Deposit Insurance Corporation (FDIC)
The FDIC insures deposits in member banks up to $250,000 per ownership category. This limit has been increased several times since its initial insurance limit of $2,500 per ownership category. The FDIC deposit insurance covers eligible bank accounts like savings accounts, CDs, and checking accounts. The FDIC does not insure all banking institutions or financial accounts. For example, it does not insure stocks, bonds, money market funds, cryptocurrency, U.S. Treasury securities (T-bills), safe deposit boxes, annuities, or insurance products.
The FDIC is managed by a five-member Board of Directors, including a Chairman, Vice Chairman, Appointive Director, the Comptroller of the Currency, and the Director of the Bureau of Consumer Financial Protection. No more than three members of the Board can be from the same political party. The FDIC also publishes documents in the Federal Register and provides resources for bankers, including guidance on regulations, information on examinations, legislation insights, and training programs.
For depositors with amounts exceeding the FDIC limit, there are ways to increase coverage. One method is to open accounts at separately chartered banks, as different branches of the same bank count as one institution for FDIC purposes. Another strategy is to utilise different ownership categories, such as individual and joint accounts, as each ownership category has its own $250,000 insurance limit. Additionally, for Massachusetts residents or those banking with Massachusetts-based institutions, the Depositors Insurance Fund (DIF) offers unlimited insurance above FDIC limits.
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![Federal Deposit Insurance Act: [As Amended Through P.L. 117–263, Enacted December 23, 2022]](https://m.media-amazon.com/images/I/517mroyL3UL._AC_UY218_.jpg)
National Credit Union Share Insurance Fund
The National Credit Union Share Insurance Fund (NCUSIF) was established by Congress in 1970 to insure member share accounts at federally insured credit unions. The fund is administered by the National Credit Union Administration (NCUA), an independent federal financial regulator. The NCUSIF is funded entirely by participating credit unions, with each federal credit union contributing one percent of insured shares. As of December 2016, the fund insured an estimated $1 trillion in member shares across more than 5,800 federally insured credit unions.
The NCUSIF provides deposit insurance to protect the accounts of credit union members, similar to the deposit insurance provided by the Federal Deposit Insurance Corporation (FDIC) for bank accounts. Each credit union member has at least $250,000 in total coverage. The fund insures individual accounts up to $250,000 and a member's interest in all joint accounts combined up to the same amount. It also separately protects members' IRA and KEOGH retirement accounts up to $250,000 and provides additional coverage for members' trust accounts.
Credit union members do not need to apply for share insurance coverage as it is provided automatically when they join a federally insured credit union. Members can, however, use the NCUA's Share Insurance Estimator to calculate the amount of coverage their insured funds have. This tool is available on the NCUA's consumer website, MyCreditUnion.gov, and can be used for personal, business, or government accounts.
The NCUSIF is backed by the full faith and credit of the United States government, and no member of a federally insured credit union has ever lost any insured savings. In the event that a credit union fails, the NCUSIF will pay members their insured shares up to $250,000.
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Depositors Insurance Fund (DIF)
The Depositors Insurance Fund (DIF) is a private, industry-sponsored deposit insurance fund that provides full insurance coverage for deposits above $250,000 at member institutions. This means that depositors at DIF-member banks enjoy complete coverage, regardless of the amount in their account. The DIF was created by a special act of the Massachusetts legislature in 1932 after a series of Massachusetts-chartered bank failures. As the US's first state-sanctioned deposit insurance fund, the DIF was designed to provide full deposit protection for individual and business depositors with failed member banks.
DIF insurance is unique to Massachusetts and has been protecting depositors since 1934. It is important to note that no depositor at a DIF-member bank has ever lost money. The DIF is not limited by the location of the depositor or the branch; it offers unlimited insurance above FDIC limits for Massachusetts residents or those banking with Massachusetts-based institutions. This means that any amount above the FDIC's $250,000 limit is automatically protected at member banks.
The FDIC, or Federal Deposit Insurance Corporation, is an independent agency of the US government that insures deposits in most bank accounts up to $250,000. This limit applies to the combined total of all accounts held by the depositor at a single bank, including savings and checking accounts. The FDIC was created in 1933 during the Depression to maintain public confidence in the financial system. It manages the Deposit Insurance Fund (DIF) to achieve this goal and resolve failed banks.
The FDIC has developed a long-term management plan for the DIF to reduce pro-cyclicality and maintain moderate, steady assessment rates while keeping a positive fund balance during economic and credit cycles, even during a banking crisis. The FDIC determines a bank's risk-based assessment rate, which differs for small and large banks. The DIF receives interest income on its securities and is reduced by loss provisions associated with failed banks and FDIC operating expenses.
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FDIC deposit insurance coverage
The Federal Deposit Insurance Corporation (FDIC) provides insurance for most bank accounts, although some banks do not have FDIC protection. The FDIC is an independent agency of the US government that protects you against the loss of your insured deposits if an insured bank fails. The FDIC does not insure all banking institutions or types of financial accounts.
FDIC deposit insurance covers $250,000 per depositor, per FDIC-insured bank, per ownership category. This includes checking accounts, savings accounts, negotiable order of withdrawal (NOW) accounts, money market deposit accounts (MMDA), certificates of deposit (CD), and other time deposit accounts. The FDIC also covers official items issued by an insured bank, such as a cashier's check or money order. Coverage is automatic when you open one of these accounts at an FDIC-insured bank.
FDIC insurance covers depositors' accounts at each insured bank, including principal and any accrued interest, up to the insurance limit. This limit is generally $250,000 for all account types combined within a single ownership category at a single bank. Each depositor is insured up to $250,000 per insured bank. If you have multiple accounts at the same bank, the FDIC insurance limit applies to the combined total of all your accounts. For example, if you have a savings account with a balance of $50,000 and a CD with $150,000 at the same bank, both accounts are insured as they fall under $250,000.
If you want to insure excess deposits over $250,000, you can open accounts at separately chartered banks to expand your FDIC coverage. Different branches of the same bank count as one institution for FDIC purposes, so opening multiple accounts at different branches of the same bank will not increase your coverage. One of the simplest ways to increase your FDIC coverage is by opening accounts under different ownership categories at the same bank. Each ownership category receives its own $250,000 insurance limit, effectively multiplying your protection. For example, a married couple could structure their accounts to insure $1 million at a single bank, with an individual account in each spouse's name.
It is important to note that the FDIC does not 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 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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FDIC-insured bank accounts
The Federal Deposit Insurance Corporation (FDIC) provides insurance for most bank accounts, although some banks do not have FDIC protection. The FDIC is an independent agency of the US government that protects you against the loss of your deposit if your bank or thrift institution fails and is FDIC-insured. FDIC deposit insurance covers $250,000 per depositor, per FDIC-insured bank, per ownership category. For example, if an individual owns both a savings and a checking account at the same bank and the combined balance of the two account types is $300,000, the individual is insured for $250,000. If that individual is also part of another account category at that same bank, such as an LLC, the LLC is insured separately for up to $250,000 for all its account types combined.
The FDIC doesn't cover 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. Instead, the National Credit Union Share Insurance Fund, run by the National Credit Union Administration (NCUA), insures credit union accounts.
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.
The FDIC has a calculator, the electronic deposit insurance estimator (EDIE), designed to give an accurate deposit insurance calculation. The accounts are treated as if they are held at different banks for six months. This grace period gives depositors time to restructure their accounts if needed so they do not exceed the FDIC insurance limit.
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Frequently asked questions
The Federal Deposit Insurance Corporation (FDIC) insures individual bank accounts in the US.
The FDIC insures up to \$250,000 per depositor, per insured financial institution, for each account ownership category.
You can open accounts at separately chartered banks to expand your FDIC coverage. For example, you could open a \$250,000 CD at one bank and another \$250,000 CD at a different bank.
The FDIC will pay you an amount equal to what you had deposited at the failed bank, up to the insurance limits. If there is no bank to acquire your deposits, the FDIC will issue you a check.
The FDIC does not cover all types of accounts. Financial instruments such as stocks, bonds, money market funds, cryptocurrency, U.S. Treasury securities (T-bills), safe deposit boxes, annuities, and insurance products are not insured by the FDIC.
