When you deposit money in a , you're trusting that institution with your financial life. But what if the bank fails? That's where insurance comes in.
What Is FDIC Insurance?
The Federal Deposit Insurance Corporation (FDIC) is a U.S. government agency that insures deposits at member banks. If your bank fails, the FDIC guarantees you'll get your insured deposits back.
Coverage limit: $250,000 per depositor, per bank, per ownership category.
This coverage is automatic. If your bank is FDIC-insured (look for the FDIC sign), your money is protected up to the limit.
What's Covered
Covered:
- Checking accounts
- Savings accounts
- Money market deposit accounts
- Certificates of deposit (CDs)
NOT covered:
- , , mutual funds
- Cryptocurrency
- Safe deposit box contents
- products
Understanding the Limits
The $250,000 limit is per depositor, per bank, per ownership category. This means you can actually have more than $250,000 insured at one bank:
Single accounts: $250,000 Joint accounts: $250,000 per co-owner Retirement accounts (IRAs): $250,000 Trust accounts: $250,000 per beneficiary (up to 5)
Example:
- Your individual savings: $250,000 (covered)
- Joint account with spouse: $500,000 ($250K each, covered)
- Your IRA: $250,000 (covered)
- Total insured at one bank: $1,000,000
FDIC vs. NCUA
| FDIC | [[NCUA]] | |
|---|---|---|
| Insures | Banks | Credit unions |
| Coverage | $250,000 | $250,000 |
| Backed by | U.S. government | U.S. government |
Both provide the same level of protection. Your money is equally safe in either.
What Happens If Your Bank Fails?
It's less dramatic than you might think:
- Friday evening: Regulators close the failing bank
- By Monday: Another bank typically takes over, or FDIC pays depositors directly
- Your access: Usually uninterrupted—same ATM card, same checks
In most cases, you barely notice. The last major bank failures (2008-2009) saw depositors fully protected.
How to Verify Coverage
- Look for "Member FDIC" on the bank's website and materials
- Use the FDIC's BankFind tool at fdic.gov
- Check that your provider is FDIC-insured
Most major banks and online banks are FDIC members. Always verify before depositing significant amounts.
When to Think About Limits
For most people, $250,000 per account type is plenty. But if you're fortunate enough to have more:
Options to stay fully insured:
- Use multiple banks
- Open different account types (individual, joint, IRA)
- Use a service like IntraFi (formerly CDARS) that spreads deposits across banks
Common Misconceptions
Myth: "Only traditional banks are insured." Truth: Many online banks are FDIC-insured. Always verify, but don't assume online = risky.
Myth: "I need to file a claim if my bank fails." Truth: FDIC insurance is automatic. You don't need to do anything—coverage kicks in immediately.
Myth: "Small banks are less safe." Truth: FDIC coverage is the same regardless of bank size.
The Bottom Line
FDIC insurance is one of the strongest consumer protections in finance. Your deposits up to $250,000 are guaranteed by the full faith and credit of the U.S. government.
When choosing where to keep your money, verify FDIC membership, but don't lose sleep over bank safety. The system works.