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Banking 101: Federal Deposit Insurance Corporation (FDIC) Definition and Limits

Written by Dillon Thompson | Published on January 23, 2020

Note: This article is part of our Basic Banking series, designed to provide new savers with the key skills to save smarter.

The Federal Deposit Insurance Corporation, better known as the FDIC, was established in 1933 to provide insurance for the money Americans put into their bank accounts. Today, FDIC insurance works in largely the same fashion: It guarantees that even if your bank goes bankrupt, your money will be safe.

In this article we will cover:

What are the FDIC Insurance Limits?

FDIC insurance covers up to $250,000 per depositor in each account ownership category at each FDIC-insured bank if your bank were to fail. Basically, if anything were to go wrong, you’d still know that the money in your account is required by law to make its way back to you.

There is zero direct cost to you to get your deposit accounts FDIC insured. All you need to do is make sure that you’ve put your money in an FDIC-insured bank or financial institution (more on that later) and your funds will be automatically covered. The insurance is dollar-for-dollar — meaning it matches exactly what you’ve deposited — and it applies to both checking and savings accounts, as well as many other types of accounts, including certificates of deposit (CDs).

It’s also worth noting, however, that the coverage amount is per depositor — not per account — which is crucial to consider if you have multiple accounts at the same bank. Coverage is also per ownership category, however, so you could have more than $250,000 insured if the funds are divided between a single account, such as a checking account and a revocable trust account, for instance.

See the table below for an example of how your insurance coverage might break down if had $300,000 deposited at one bank, even if that money was held in three separate accounts that were all within the same ownership category.

Account Deposit Amount FDIC Insurance Amount
Savings account $100,000 $100,000
Checking account $100,000 $100,000
Certificate of deposit $150,000 $50,000
Uninsured amount: $50,000

The amount covered by FDIC insurance has grown quite a bit over the years. Originally, the FDIC only covered up to $2,500 in deposits, but that limit has since increased numerous times. In 2010, the agency permanently increased its maximum coverage to $250,000.

How to maximize your FDIC insurance coverage

The simplest way to do maximize FDIC coverage is by opening accounts at more than one bank. If you want to make sure all of your money is FDIC-insured, it’s best to spread your money between financial institutions, making sure you never have more than $250,000 invested in one place.

To illustrate, let’s go back to the same hypothetical as above, where you have $300,000 to deposit. This time, however, let’s make sure it all gets insured by spreading it out between three separate banks.

Account Deposit FDIC Insurance
Checking account at Bank No. 1 $100,000 $100,000
Savings account at Bank No. 2 $100,000 $100,000
Certificate of deposit at Bank No. 3 $150,000 $150,000
Uninsured amount: $0
Another way to maximize coverage is by investing in separate categories of accounts, such as revocable trust accounts and employee benefit plan accounts. Certain types of retirement accounts also apply here, even if the account is in the same name as your checking or savings account. Here’s a full list of the ownership categories accepted by the FDIC:
  • Single accounts
  • Certain retirement accounts
  • Joint accounts
  • Revocable trust accounts
  • Irrevocable trust accounts
  • Employee benefit plan accounts
  • Corporation/partnership/unincorporated association accounts
  • Government accounts

What FDIC insurance covers

These account types are covered by FDIC insurance:

  • Checking accounts
  • Negotiable order of withdrawal (NOW) accounts
  • Savings accounts
  • Money market deposit accounts (MMDAs)
  • Certificates of deposit (CDs) and other time deposits
  • Official items issued by a bank, such as cashier's checks or money orders

What FDIC insurance doesn’t cover

These investments and account types are not insured by the FDIC:

  • Stock investments
  • Bond investments
  • Mutual funds
  • Life insurance policies
  • Annuities
  • Municipal securities
  • Safe deposit boxes or their contents
  • U.S. Treasury bills, bonds or notes

How much is FDIC insurance on a joint account?

The FDIC insurance for a joint account is essentially double the usual coverage, as the agency provides full backing for each account holder — $250,000 per person. Therefore, the FDIC limit for a joint account between two people is $500,000.

There are some stipulations to keep in mind, though. The FDIC states that the co-owners of an account must be “natural persons” (as opposed to corporations or trusts), must have equal withdrawal rights and must both sign the signature card on the account.

FDIC insurance FAQs

Are credit unions FDIC insured?

Credit unions are not insured by the FDIC, but are instead covered by the National Credit Union Administration (NCUA). The NCUA is similar to the FDIC, as both are federally-run agencies that insure accounts of up to $250,000 per person, per ownership category, per institution. If you want to make sure your credit union funds are NCUA-insured, simply check the government’s search tool.

Are online banks FDIC insured?

Many online banks are FDIC insured. Just like with brick-and-mortar institutions, it’s just worth checking which banks are insured before deciding where to place your money. To determine if any bank — physical or online — is FDIC-insured, you can use the FDIC’s search tool.

Are CDs FDIC insured?

Yes, there is FDIC insurance on certificates of deposit. CDs are insured the exact same way as checking accounts, savings accounts and all other supported account forms.

Are money market accounts FDIC insured?

Money market deposit accounts are FDIC insured. However, the FDIC warns that people should avoid confusing these with money market mutual funds, which are not covered.

How can I find FDIC insured banks?

To find a list of FDIC-insured banks, you can use the FDIC’s bank search tool (called BankFind), which allows you to look for covered institutions nationwide. You can also reference the agency’s institution directory, which lists all insured banks by their name and location.

Are there banks that offer extra insurance on deposits?

There are some banks that offer private insurance for amounts beyond the FDIC’s coverage maximum, and several state-chartered credit unions have similar offerings. In many cases, the easiest way to find out if your financial institution offers additional insurance is simply to ask.

Is there an FDIC insurance calculator that can help me?

The FDIC’s Electronic Deposit Insurance Estimator (EDIE) will tell you how each bank’s insurance rules and limits apply to your specific group of accounts. The tool is completely free, and it works for every type of account covered by the FDIC, including checking, savings, money market deposit accounts and CDs.

  |     |   Comment #1
I'm surprised you don't mention that perhaps the easiest way to extend FDIC coverage beyond $250k is to designate two or more POD ((payable-on-death) beneficiaries, as the FDIC covers $250k per POD beneficiary (so 2 gets $500k coverage, 3 gets $750k).

  |     |   Comment #2
my name is anthony Gibson I have 15 netspend direct deposit account cards given to them from metabank or DTC . OR FDIC for years I call say they will not do anything .that affect my paypal ' banks How do iget my money I am 62 years and haave a brain tumor and my doctor say write the wii please help
  |     |   Comment #3
Going thru identity theft and I recover some accounts and then I went to E.D.I.E and put those accounts in the system and my name,then they all came back accurate..those that mean I have that money for real deposit into accounts.im lost on how this works
  |     |   Comment #4
Perhaps it’s only me...I don’t understand your post
  |     |   Comment #5
It's not just you. between the poor grammar and the rambling narrative I not sure what point they're trying to make.

Apparently that had an identity theft issue and had to recover their accounts, but then they go off on a tangent to discuss the FDIC Electronic Deposit Insurance Estimator (EDIE) as if that was some kind of verafier of what they really have in their accounts, it's not. It only tells you how much of your money would/would not be FDIC insured under the scenarios you give it. FDIC insurance, however, does nothing to protect or reimburse you from identity theft.

In short, the two things jimmy appears to have been discussing have nothing to do with each other.
  |     |   Comment #6
How much total money do i have in a deposit account

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