YourFinanceCoach

How FDIC insurance works

By YourFinanceCoach EditorialUpdated 3 min read

Short answer

The standard FDIC insurance amount is $250,000 per depositor, per insured bank, for each ownership category. Because it is per category, a single person can be covered for more than $250,000 at one bank by holding money in different capacities — for example individually and jointly.

This answers: How much of my money is protected by FDIC insurance?

Key takeaways

  • Coverage is automatic at an insured bank. There is nothing to apply for and no fee.
  • The limit applies per depositor, per bank, per ownership category — not per account.
  • Investments are not covered, even when bought through a bank: stocks, bonds, mutual funds, annuities and crypto are all outside it.
  • Credit unions are covered by the NCUA instead, on a comparable basis.

What it is

The Federal Deposit Insurance Corporation is a US government agency that insures deposits at member banks. If an insured bank fails, the FDIC covers depositors up to the insurance limit — historically within days, and without depositors needing to make a claim.

Coverage is automatic. You do not apply, you are not charged, and you cannot opt out. What you can do is check that your bank is actually a member, using the FDIC's BankFind tool.

The limit

The standard insurance amount is $250,000 per depositor, per insured bank, for each ownership category.

Every part of that phrase does work:

  • Per depositor — per person, not per account. Three accounts in your sole name at one bank are added together and covered as one $250,000 bucket.
  • Per insured bank — $250,000 at Bank A and $250,000 at Bank B are separately covered. Note that two brands owned by the same insured institution usually share one limit; BankFind will tell you.
  • Per ownership category — this is the part that lets one person exceed $250,000 at a single bank.

Ownership categories

Deposits held in different legal capacities are insured separately. The main categories include:

CategoryHow it is counted
Single accountsAll accounts in your sole name, combined
Joint accountsEach co-owner's share is insured separately
Certain retirement accountsIRAs and similar, held separately from single accounts
Revocable trust accountsCoverage depends on the number of eligible beneficiaries
Irrevocable trustsSeparate rules apply
Employee benefit plan accountsSeparate
Business, government and other categoriesSeparate

A married couple at one bank can therefore be covered for well beyond $250,000 by combining individual and joint holdings. The FDIC's EDIE calculator works out a specific situation precisely, and is the right tool if you are near a limit — the trust rules in particular are not something to estimate.

What is covered

  • Checking accounts
  • Savings accounts
  • Money market deposit accounts
  • Certificates of deposit
  • Cashier's checks, money orders and certain official items issued by the bank

What is not covered

This is where people get caught, because these are often sold by a bank:

  • Stocks, bonds and mutual funds
  • Money market mutual funds (different from money market deposit accounts)
  • Annuities and life insurance policies
  • Municipal securities
  • US Treasury securities — not FDIC-insured, though backed by the government directly
  • Cryptocurrency
  • Contents of a safe deposit box

The distinction is between a deposit, where the bank owes you money, and an investment, where you own an asset that can fall in value. FDIC insurance covers the first and never the second.

Credit unions

Federally insured credit unions are covered by the National Credit Union Administration through the Share Insurance Fund, on a comparable basis and at a comparable limit. It is a different agency and a different fund, not the FDIC — so if you are checking coverage, check the right one.

Run the numbers

Sources

  1. Deposit Insurance At A GlanceFederal Deposit Insurance Corporation
  2. BankFind — check whether a bank is FDIC-insuredFederal Deposit Insurance Corporation
  3. Electronic Deposit Insurance Estimator (EDIE)Federal Deposit Insurance Corporation
  4. Share Insurance FundNational Credit Union Administration

Educational information only. This page explains how something works in the United States. It is not financial advice and does not take account of your circumstances. Rates, fees and eligibility change without notice — check the provider’s own terms before you act.

For free, impartial guidance, see Consumer Financial Protection Bureau. To complain about a firm, contact the CFPB complaint database.

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