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What FDIC Insurance Is and Their Coverage Limits

FDIC insurance protects your bank account money. There are limitations on the amount that is covered.

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Federal Deposit Insurance Corp. insurance protects your money in the event of a bank failure.

FDIC insurance covers up to $250,000 per depositor per institution and per ownership type.

FDIC insurance protects deposit accounts as well as other official items, such as cashier’s checks or money orders.

Federally insured banks will display the FDIC logo on their website.

Banks are safe places to keep your money. However, the recent past has shown us that banks can fail. This means they may not be able to meet their obligations to depositors and those who borrowed from them.

If a bank goes out of business, the customer’s funds are protected. Federally insured banks are backed by Federal Deposit Insurance Corp. Credit unions also offer protection through the National Credit Union Administration. FDIC insurance covers up to $250,000 per depositor per institution and per ownership type. FDIC insurance kicks into effect only in the event of a bank’s failure.

Let’s take a closer look at the FDIC, what it covers and how it protects your hard-earned money.

FDIC Insurance: What does it mean?

FDIC insurance protects your money up to a specified amount in the event of a bank failure. In response to many bank failures during Great Depression, the FDIC was created in 1933.

It was established to increase public trust in the banking system through the protection of consumers’ deposits. Many banks were bankrupt during the Great Recession. In 2020, four banks failed. Despite this, the FDIC has not lost a single cent of insured deposits since its creation [1].

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Banks are not automatically insured. FDIC insurance is available to them. It comes with a price, just like other forms of insurance. You don’t have to pay a monthly fee and your tax dollars do not foot the bill. The bank pays the premiums.

FDIC insurance: What is covered

FDIC insurance covers up to $250,000 per depositor per institution and per ownership type (ownership refers to the owner of the account. Skip ahead to learn more. FDIC insurance covers these deposit accounts as well as other official items issued or insured by banks

  • Checking.
  • Savings.
  • Money market accounts
  • Certificates of Deposit
  • Cashier’s checks, money orders, and cashier’s checks
  • Order of withdrawals is negotiable

FDIC insurance: What is not covered

  • Annuities.
  • Investing in stocks, bonds, or mutual funds.
  • Even if the investments were made from an insured bank, there can be losses.
  • Policies for life insurance
  • The contents of a safe deposit box are housed in a bank.
  • Municipal securities.

U.S. Treasury notes, bonds, and bills are not covered by FDIC insurance. However, they are backed 100% by the full faith of the federal government.

FDIC insurance limits and ownership catégories

What does it mean to be covered by FDIC insurance up to $250,000 per depositor per institution and per ownership type?

One depositor per institution: The FDIC insures deposits one person (the depositor), has in one insured bank (the bank), and is separate from deposits the depositor has in another insured bank. If the depositor has deposited in multiple branches of an insured bank, they are added together to the $250,000 limit.

Per ownership category: The account’s owner simply refers to the type of account. It is easy to distinguish between single accounts, which are owned only by one person, and joint accounts, which are shared by several people. There are other types of ownership, including IRAs and trust accounts as well as employee benefit plan accounts.

Money in different ownership categories will be covered separately. If funds are held in different ownership types and other requirements, a person with multiple accounts at an insured bank may be eligible for more than $250,000 of coverage. For example, if two people co-own an account, the account can be insured up to $250,000 per person for a total of $500,000.

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Below are the FDIC ownership categories with the applicable insurance limits.

Single accounts (owned by one person)

$250,000 per owner (aka depositor).

Joint accounts (owned by more than one person)

$250,000 per co-owner.

Certain retirement accounts, including IRAs

$250,000 per owner.

Revocable trust accounts

$250,000 per depositor per unique beneficiary.

Irrevocable trust accounts

$250,000 per unique beneficiary entitled to the account.

Corporation, partnership, and unincorporated association accounts

$250,000 per corporation, partnership, or unincorporated association.

Employee benefit plan accounts

Learn more

An employee benefit plan account is a deposit of a pension plan, defined benefit plan, or other employee benefit plan that isn’t self-directed. Read more about benefit plans.

$250,000 per plan participant entitled to the account.

Government accounts

Examples
  • Accounts owned by the United States, including federal agencies.

  • Accounts owned by any state, county, municipality, the District of Columbia, Puerto Rico or other government territories.

  • Accounts owned by a Native American tribe.

$250,000 per official custodian.

Here are some examples of FDIC insurance coverage and limits

These are just a few examples of the FDIC coverage limits.

1. If you’re single, all your banking needs can be handled in one location.

$50,000 in a checking or savings account

A savings account with $100,000

Certificates of Deposit: $200,000

This is a total deposit of $350,000 in one bank, as one depositor (you), in one institution (your bank), and in one ownership category (“single”). The FDIC will only cover up to $250,000.

Do not worry, however, as FDIC coverage can provide you with much more coverage depending on the location of your accounts and how they were owned. Spreading your money across multiple institutions is one way to ensure that all of your money will be insured. Take the following example.

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2. If you are single, but do your banking at two different banks, you will have:

$50,000 in a Bank 1 checking account

Bank 1: $200,000 savings account

$250,000 in Certificates of Deposit at Bank 2.

This is a $500,000 total that you can deposit at two institutions (two banks) and one ownership category (single). All of your money is safe because you have $250,000 at one bank but $250,000 at another.

One more example shows how the different ownership types affect how your money will be insured.

3. You are married and do your banking together.

$500,000 in joint savings accounts with your spouse.

$250,000 in a certificate deposit under your name.

This amounts to $750,000. All this money is secured. Because you are both different depositors, the joint savings account has one ownership category (joint). This means that you and your spouse can be covered up to $250,000 each. The certificate of deposit falls under a second ownership category (single). This means that the depositor (you), is covered up to $250,000 in that account.

Compare the top savings accounts

You can choose from the best places to store your cash.

There are far too many options to fully cover them all. You have many options to ensure that all your money is covered. Spread your money among multiple banks if you are at risk of exceeding or bumping up against the $250,000 limit at one institution. This will ensure that your funds are all insured.

How to determine if your bank has FDIC insurance

Search for your bank using the FDIC’s BankFind to find out if your deposits are federally insured. The FDIC insurance logo can be found on any bank’s website. This logo must be displayed by insured banks. Check the FDIC website to see the proper format for the logo.

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