FDIC deposit insurance protects your money in deposit accounts at FDIC-insured banks in the event of a bank failure. Since the FDIC was founded in 1933, no depositor has lost a penny of FDIC-insured funds.
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How FDIC Deposit Insurance Works
The FDIC helps maintain stability and public confidence in the U.S. financial system. One way we do this is by insuring deposits to at least $250,000 per depositor, per ownership category at each FDIC-insured bank.
The FDIC maintains the Deposit Insurance Fund (DIF), which:
- Insures deposits and protects depositors of FDIC-insured banks and
- Helps fund our resolution activities when banks fail.
The DIF is backed by the full faith and credit of the United States government, and it has two sources of funds:
- Assessments (insurance premiums) that FDIC-insured institutions pay and
- Interest earned on funds invested in U.S. government obligations. The FDIC buys Treasury notes, and the interest on those notes helps the DIF grow.
FDIC deposit insurance only covers deposits, and only if your bank is FDIC-insured.
Make sure your bank is FDIC-insured, using the BankFind Suite search tool.
How to Know If Your Account is Covered
FDIC insurance covers deposits in all types of accounts at FDIC-insured banks, but it does not cover non-deposit investment products, even those offered by FDIC-insured banks. Additionally, FDIC deposit insurance doesn’t cover default or bankruptcy of any non-FDIC-insured institution.
Covered
Money deposited at FDIC-insured banks in:
Checking accounts
Negotiable order of withdrawal (NOW) accounts
Savings accounts
Money market deposit accounts (MMDAs)
Time deposits such as certificates of deposit (CDs)
Cashier’s checks, money orders, and other official items issued by a bank
Not Covered
Stock investments
Bond investments
Mutual funds
Annuities
Life insurance policies
Safe deposit boxes or their contents
U.S. Treasury bills, bonds, or notes
Municipal securities
Crypto assets
Understanding Your Coverage Limits
FDIC deposit insurance covers $250,000 per depositor, per FDIC-insured bank, for each account ownership category.
Ownership categories include:
- Single accounts
- Joint accounts
- Certain retirement accounts —for example, Individual Retirement Accounts (IRAs)
- Revocable trust accounts
- Irrevocable trust accounts
- Employee benefit plan accounts
- Corporation / partnership / unincorporated association accounts
- Government accounts
All of your deposits in the same ownership category in the same FDIC-insured bank are added together for the purpose of determining FDIC deposit insurance coverage. However, you may qualify for more than $250,000 in FDIC deposit insurance coverage if you deposit money in accounts that are in different ownership categories.
For example:
If you have a single ownership account at an FDIC-insured bank, and you have 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.
-or-
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 FDIC-insured bank.
-or-
If you have two single ownership accounts (such as a checking account and a savings account) and an individual retirement account (IRA) at the same FDIC-insured bank, then you will be insured up to $250,000 for the combined balance of the funds in the two single ownership accounts. You will be separately insured up to $250,000 for the funds in the IRA, because IRAs are in a different account ownership category.
Use the FDIC’s online Electronic Deposit Insurance Estimator (EDIE) to calculate how much of your funds are covered by deposit insurance.
Protecting Depositors During a Bank Failure
Bank failures are unlikely, but they do happen. FDIC deposit insurance protects your insured deposits if your bank closes. The FDIC acts quickly when this happens to ensure that access to your insured deposits is not interrupted.
Questions About Deposit Insurance?
FAQs
deposit insurance, special type of insurance, under which depositors are guaranteed against loss in the event of a bank failure. It was developed in the United States during the Great Depression of the 1930s to meet the serious problems created by frequent bank suspensions.
What is the FDIC for dummies? ›
What is the FDIC? The FDIC—short for the Federal Deposit Insurance Corporation—is an independent agency of the United States government. The FDIC protects depositors of insured banks located in the United States against the loss of their deposits, if an insured bank fails.
What is the importance of deposit insurance and understanding your coverage? ›
Bottom line. In the event of a bank failure, FDIC insurance provides crucial protection for consumers' deposits. With up to $250,000 in coverage per depositor, per FDIC-insured bank, per ownership category, it's important for individuals and businesses to understand the limits and guidelines of this insurance.
Is it safe to have more than $250000 in a bank account? ›
An account that contains more than $250,000 at one bank, or multiple accounts with the same owner or owners, is insured only up to $250,000. The protection does not come from taxes or congressional funding. Instead, banks pay into the insurance system, and the insurance provides their customers with protection.
What are the most important features of deposit insurance? ›
In case of a bank failure, the Deposit Insurance System guarantees the reimbursement of up to maximum amount per depositor, regardless of the number and type of deposits held in such a bank and within the specified time period.
What do you understand by insurable deposits? ›
Insured deposit refers to the amount due to any depositor for deposits in an insured bank net of any obligation of the depositor to the insured bank as of the date of closure, but not to exceed the Maximum Deposit Insurance Coverage.
What does deposit insurance protect against? ›
The FDIC provides deposit insurance to protect your money in the event of a bank failure. Your deposits are automatically insured to at least $250,000 at each FDIC-insured bank.
What is the principle of deposit insurance? ›
The principal objectives for deposit insurance systems are to contribute to the stability of the financial system and protect depositors. Public policy generally involves the selection of goals and the means of achieving them within a specified context.
What is risk of deposit insurance? ›
Risk-based deposit insurance is insurance with premiums that reflect how prudently banks act when investing their customers' deposits. The idea is that flat-rate deposit insurance shelters banks from their true level of risk-taking and encourages poor decision-making and moral hazard.
Where do millionaires keep their money if banks only insure 250k? ›
Millionaires can insure their money by depositing funds in FDIC-insured accounts, NCUA-insured accounts, through IntraFi Network Deposits, or through cash management accounts. They may also allocate some of their cash to low-risk investments, such as Treasury securities or government bonds.
Of all the financial institutions reporting, including commercial banks and federal savings banks, there are approximately 860 million deposit accounts (not including retirement accounts). But fewer than one percent–just 0.83 percent–of these accounts have more than $250,000.
Can banks seize your money if the economy fails? ›
It indicates an expandable section or menu, or sometimes previous / next navigation options. Your money is safe in a bank, even during an economic decline like a recession. Up to $250,000 per depositor, per account ownership category, is protected by the FDIC or NCUA at a federally insured financial institution.
What is term deposit in insurance? ›
Term deposits are time deposit schemes where you invest money with a financial institution for a fixed duration. The duration of a term deposit may vary from week to several years, and you have the freedom to choose a tenure that matches your investment goals.
What is the explanation of a term deposit? ›
What is a term deposit? With a term deposit, you lock away an amount of money for an agreed length of time (the 'term') – that means you can't access the money until the term is up. In return, you'll get a guaranteed rate of interest for the term you select, so you'll know exactly what the return on your money will be.
What is deposit insurance Quizlet? ›
Federal Deposit Insurance Corporation. Insure funds for depositors and remove reason for bank runs, charges premiums to institutions based on total deposits. adverse selection. insurance shields from potential adverse effects of risky decisions.
Which of the following best defines the term deposit insurance? ›
Deposit insurance is a system that makes sure depositors in a bank do not lose their money, even if the bank goes bankrupt.
Checking accounts
Negotiable order of withdrawal (NOW) accounts
Savings accounts
Money market deposit accounts (MMDAs)
Time deposits such as certificates of deposit (CDs)
Cashier’s checks, money orders, and other official items issued by a bank
Stock investments
Bond investments
Mutual funds
Annuities
Life insurance policies
Safe deposit boxes or their contents
U.S. Treasury bills, bonds, or notes
Municipal securities
Crypto assets
