When you deposit money at a bank, you’re trusting that institution to keep it safe. FDIC insurance is the federal backstop that protects you if the bank itself fails. Here’s how it works, what it covers, and where the limits are.
What is the FDIC?
The Federal Deposit Insurance Corporation (FDIC) is an independent U.S. government agency created in 1933 following the bank failures of the Great Depression. Its job is to insure deposits at member banks — meaning if your bank fails, the FDIC steps in and makes sure you get your money back, up to the coverage limit.
The FDIC does not receive congressional appropriations. It’s funded by premiums paid by the banks it insures and by earnings from its investments.
How much does FDIC insurance cover?
The standard coverage limit is $250,000 per depositor, per insured bank, per account ownership category. That phrase matters because it means you can have more than $250,000 protected — if the money is spread correctly.
For most people with a single checking or savings account at one bank, the limit is simply $250,000. If your balance is below that, you’re fully covered.
Account ownership categories
The FDIC doesn’t insure $250,000 per account — it insures $250,000 per ownership category at each bank. The most common categories:
- Single accounts — accounts owned by one person. Covered up to $250,000 combined across all single accounts at that bank.
- Joint accounts — accounts owned by two or more people. Each co-owner is covered up to $250,000 for their share. A joint account with two owners is covered up to $500,000 total.
- Retirement accounts (IRAs, Roth IRAs) — covered separately up to $250,000 per bank.
- Trust accounts — coverage depends on the number of beneficiaries; each eligible beneficiary adds $250,000 of coverage up to certain limits.
Example: if you have $200,000 in a personal checking account and $200,000 in an IRA at the same bank, both are fully covered because they’re in different ownership categories.
What FDIC insurance covers
- Checking accounts
- Savings accounts
- Money market deposit accounts (bank-offered, not money market funds)
- Certificates of deposit (CDs)
- Cashier’s checks and money orders issued by the bank
What FDIC insurance does not cover
- Stocks, bonds, and mutual funds — even if purchased through your bank
- Annuities
- Life insurance products
- Municipal securities
- Money market mutual funds (these are investment products, not bank deposits)
- Losses due to fraud or theft — those are covered by separate fraud protections
How to check if your bank is FDIC-insured
Look for the FDIC logo on the bank’s website or at branch entrances. You can also use the FDIC’s BankFind tool at fdic.gov to search any U.S. bank by name and confirm its insured status. If a bank isn’t on that list, your deposits are not federally insured.
Online banks are required to be FDIC-insured just like traditional banks — check before opening an account.
What happens if a bank fails?
Bank failures are rare, but they do happen. When an FDIC-insured bank fails, the FDIC acts quickly — usually over a weekend — to either transfer accounts to another insured bank or mail checks to depositors for insured balances. In most cases, depositors have access to their money by the next business day.
You don’t need to file a claim or take any action if your deposits are within the insured limits. The FDIC handles it automatically.
Credit unions: NCUA coverage
Credit unions are not covered by the FDIC. Instead, deposits at federally insured credit unions are protected by the National Credit Union Administration (NCUA) under the same $250,000 limit per member, per ownership category. The protection is equivalent — the agency is different.
When evaluating a credit union, look for “federally insured by NCUA” the same way you’d look for FDIC membership at a bank.
Further Reading
- What Is a Checking Account?
- How to Open a Bank Account
- Credit Unions: Are They Better Than Banks?
- Earn More on Your Savings
- Protect Against Bank Fraud
This article is for general educational purposes only and does not constitute financial advice. FDIC coverage limits and rules can change — verify current limits at fdic.gov.