Jeffrey Wade
An insured deposit account is a bank account that is covered by the Federal Deposit Insurance Corporation (FDIC). FDIC-insured accounts are protected by the full faith and credit of the US government, safeguarding customer deposits in the event of bank failures or theft. FDIC insurance covers depositor accounts at each insured bank, including principal and any accrued interest, up to a limit of $250,000 per depositor, per bank, and per ownership category. This limit applies to various account types, including single, joint, and retirement accounts. The FDIC insurance is provided automatically when opening an account at an FDIC-insured bank, with no additional action required by the depositor.
| Characteristics | Values |
|---|---|
| Definition | A bank or thrift account covered by the Federal Deposit Insurance Corporation (FDIC), an independent federal agency responsible for safeguarding customer deposits in the event of bank failures. |
| Insurer | FDIC |
| Insured amount | $250,000 per depositor, per FDIC-insured bank and per ownership category. |
| Insured entities | Deposits in traditional deposit accounts, such as negotiable orders of withdrawal (NOW), checking, savings, money market deposit accounts, and certificates of deposit (CDs). |
| Insured accounts | Single Account, Joint Account, Retirement Account. |
| Insured banks | Large and small banks that are FDIC-insured. |
| Exclusions | Non-deposit investments or investment products, even if purchased at an insured bank. |
| Additional coverage | Up to $5 million of FDIC coverage ($10 million for joint accounts of two or more people) through the Edward Jones Insured Bank Deposit program. |
| Verification | Participating banks are required to display an official sign at each teller window or station where deposits are regularly received. Depositors can also verify through a search at FDIC.gov. |
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What You'll Learn
FDIC-insured deposits protect your money
An insured deposit account is a deposit account backed by Federal Deposit Insurance Corporation (FDIC) insurance. FDIC insurance is backed by the full faith and credit of the United States government. FDIC-insured deposits protect your money in the event of a bank failure.
FDIC deposit insurance protects your money in deposit accounts at FDIC-insured banks in the event of a bank failure. FDIC insurance covers depositor accounts at each insured bank, dollar-for-dollar, including principal and any accrued interest through the date of the insured bank's closing, up to the insurance limit. The standard maximum deposit insurance amount is $250,000 per depositor, per insured bank, for each account ownership category. FDIC insurance covers deposits received at an insured bank, but does not cover investments, even if they were purchased at an insured bank.
FDIC-insured deposits also protect your money by providing deposit insurance coverage for different account ownership categories. A Single Account is a deposit owned by one person with no beneficiaries. A Joint Account is a deposit owned by two or more people with no beneficiaries. FDIC insurance covers joint accounts owned in any manner conforming to applicable state law, such as joint tenants with the right of survivorship, tenants by the entirety, and tenants in common.
The FDIC also provides resources to help people without bank accounts get started with opening an FDIC-insured deposit account.
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Insured deposits at multiple banks
An insured deposit account is a deposit account that is backed by Federal Deposit Insurance Corporation (FDIC) deposit insurance. FDIC insurance covers depositor accounts at each insured bank, including principal and any accrued interest up to the date of the insured bank's closing. The standard insurance limit is $250,000 per depositor, per insured bank, for each account ownership category.
FDIC insurance is backed by the full faith and credit of the United States government. Since the FDIC began operations in 1934, no depositor has ever lost money on FDIC-insured deposits. Coverage is automatic when you open one of these accounts at an FDIC-insured bank.
If you have deposits that exceed the $250,000 insurance limit, you can ensure your money is protected by spreading it across multiple FDIC-insured banks. This is because the FDIC insures deposits that a person holds in one insured bank separately from any deposits that the person owns in another separately-chartered insured bank.
For example, if you have $350,000 deposited in one bank as one depositor, in one institution, and in one ownership category (single), the FDIC would only cover up to $250,000, meaning you would lose $100,000 if the bank failed. However, if you deposited $250,000 in one bank and $250,000 in another, all of your money would be protected.
One way to take advantage of this is to use an Insured Bank Deposit program, such as the one offered by Edward Jones. This program offers a competitive interest rate and up to $5 million of FDIC coverage ($10 million for joint accounts of two or more people). When your balance nears the FDIC limit at one bank, any additional cash is deposited at another eligible program bank.
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Single and joint accounts
A Single Account is a deposit owned by one person with no beneficiaries. This includes accounts held in one person's name only, accounts established for one person by an agent, nominee, guardian, custodian, or conservator, and accounts held in the name of a business that is a sole proprietorship. Single accounts are insured up to $250,000 per owner.
A Joint Account is a deposit owned by two or more individuals with no beneficiaries. Joint accounts are owned in any manner conforming to applicable state law, such as joint tenants with the right of survivorship, tenants by the entirety, and tenants in common. All co-owners must be living people and must have equal rights to withdraw deposits from the account. Joint accounts are also insured up to $250,000 per co-owner.
In the case of a joint account owner's death, the FDIC continues to insure the account for up to $500,000 under the Joint Accounts category during a six-month grace period. After this period, the account will be insured as a Single Account, and the funds will be insured up to $250,000 under the Single Accounts category.
It is important to note that the FDIC combines all single accounts owned by the same person at the same bank and insures the total up to $250,000. Similarly, for joint accounts, the FDIC combines each co-owner's shares of all joint accounts at the same bank and insures each co-owner's total up to $250,000.
The Edward Jones Insured Bank Deposit program is an example of an interest-bearing savings solution that includes FDIC protection. This program offers up to $5 million of FDIC coverage for single accounts and $10 million for joint accounts with two or more people.
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Retirement accounts
Insured deposit accounts are those that are backed by the Federal Deposit Insurance Corporation (FDIC) deposit insurance. The FDIC was founded in 1933 and has been operating since 1934. It provides deposit insurance to protect your money in the event of a bank failure. FDIC insurance covers deposits in all types of accounts at FDIC-insured banks, including retirement accounts, but does not cover non-deposit investment products.
- Defined benefit plan deposits (plans for which the benefits are determined by an employee’s compensation, years of service, and age), which are insured as Employee Benefit Plan accounts.
- Defined contribution plans that are not self-directed, which are insured as Employee Benefit Plan Accounts.
- Section 457 deferred compensation plan accounts, such as an eligible deferred compensation plan provided by state and local governments, regardless of whether the plan is self-directed.
The FDIC adds together all deposits in retirement accounts owned by the same person at the same insured bank and insures the total amount up to a maximum of $250,000. This limit applies per depositor, per insured bank, for each account ownership category. If you have a single ownership account at an FDIC-insured bank, and an individual retirement account (IRA) at the same bank, you will be insured up to $250,000 for the combined balance of the two accounts. You will also be separately insured up to $250,000 for the funds in the IRA, as it is in a different account ownership category.
If you have a single ownership account in one FDIC-insured bank, and another single ownership account in a different FDIC-insured bank, you will be insured for up to $250,000 for your single account deposits at each bank. Additionally, 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.
It is important to note that FDIC insurance does not cover investments, even if they were purchased at an insured bank. However, U.S. Treasury Bills, Bonds, or Notes are not insured by the FDIC but are backed by the full faith and credit of the U.S. government. The FDIC insurance limit for all insurable capacities in the Insured Bank Deposit program is $250,000 per program bank. However, by using multiple banks, the program can provide up to $5 million of FDIC insurance ($10 million for joint accounts with two or more account owners).
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Deposit insurance coverage
FDIC deposit insurance protects money held in traditional deposit accounts at FDIC-insured banks. Coverage is automatic when opening one of these accounts, and it applies to various account types, including single accounts, joint accounts, and retirement accounts. For single ownership accounts, the FDIC provides insurance coverage of up to $250,000 per depositor. If you have multiple single ownership accounts at the same bank, the coverage still applies to the combined balance.
For joint accounts owned by two or more people, FDIC insurance covers each co-owner's interest separately, up to $250,000 per owner. Similar to single ownership accounts, if you have multiple joint ownership accounts at the same bank, the coverage applies to the combined balance. Additionally, certain retirement accounts, such as Section 457 deferred compensation plans, are insured up to $250,000, regardless of whether the plan is self-directed.
It's important to note that FDIC insurance does not cover investments, even if they were purchased at an insured bank. The coverage specifically applies to deposit accounts. To determine your specific deposit insurance coverage, you can contact the FDIC or use their online resources, such as the Electronic Deposit Insurance Calculator.
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Frequently asked questions
An insured deposit account is a bank or thrift account covered by the Federal Deposit Insurance Corporation (FDIC), which safeguards customer deposits in the event of bank failures, reimbursing any losses suffered.
The maximum insurable amount in a qualified account is $250,000 per depositor, per FDIC-insured bank and per ownership category.
Insured deposit accounts benefit savers as they need not worry about the safety of their money and can focus on finding the best interest rate on a savings account.
