FDIC insurance protects deposits at FDIC-insured banks up to $250,000 per depositor, per insured bank, per ownership category if the bank fails. It covers deposit accounts such as checking, savings, money market deposit accounts and CDs, but not investments like stocks, bonds, mutual funds, annuities or crypto assets, even when bought through a bank.
Key Takeaways
- The standard FDIC insurance amount is $250,000 per depositor, per FDIC-insured bank, per ownership category.
- Coverage is automatic when a deposit account is opened at an FDIC-insured bank; there is nothing to apply for or buy.
- CDs are covered as deposits, while stocks, bonds, mutual funds, annuities, life insurance policies and crypto assets are not.
- Deposits in different ownership categories, such as single, joint and certain retirement accounts, are insured separately even at the same bank.
- Since April 1, 2024, trust accounts are insured up to $250,000 per beneficiary for up to five beneficiaries, a maximum of $1,250,000 per owner at each bank.
- Uninsured funds at a failed bank are handled through receivership certificates rather than insurance payments.
What FDIC Insurance Is and How Coverage Works
FDIC insurance is protection for bank customers in the event that an FDIC-insured bank fails. The Federal Deposit Insurance Corporation was created under the Banking Act of 1933, during the Great Depression, to restore confidence in the U.S. banking system after waves of bank failures.
Coverage requires no action from the depositor. FDIC insurance applies automatically whenever someone opens a deposit account at an FDIC-insured bank, with no application or purchase involved. Protection applies dollar for dollar, including both principal and interest, up to the insurance limit.
The $250,000 Limit and Its Three Qualifiers
The standard FDIC insurance amount is $250,000, but the full rule matters more than the number. Coverage applies per depositor, per FDIC-insured bank and per ownership category. Each qualifier changes how much of a person’s money is protected.
The per-bank qualifier means the limit applies separately at each insured bank. A depositor with accounts at two different FDIC-insured banks is covered up to $250,000 per ownership category at each one. Multiple accounts in the same ownership category at the same bank, however, are added together and share a single $250,000 limit.
What FDIC Insurance Covers and What It Does Not
FDIC insurance covers deposits. That includes checking accounts, savings accounts, money market deposit accounts and certificates of deposit. Retirement deposit accounts held at a bank, such as IRAs and SEPs, are also covered within their own category.
FDIC insurance does not cover investments, even those purchased at an insured bank. According to the FDIC, investment products that are not deposits, such as mutual funds, annuities, life insurance policies, and stocks and bonds, fall outside deposit insurance. The list of uncovered items also includes municipal securities, U.S. Treasury bills, bonds and notes, crypto assets, and safe deposit boxes and their contents.
The distinction is between a deposit and an investment, not between what a bank does and does not sell. A mutual fund bought at a bank branch carries no FDIC insurance, while a CD at the same branch does.
How FDIC Ownership Categories Work
An ownership category describes how an account is legally owned. The FDIC insures each category separately, so deposits held in different ownership categories are each insured up to at least $250,000, even at the same bank.
- Single accounts: owned by one person, insured up to $250,000 per owner.
- Joint accounts: owned by two or more people with no beneficiaries, insured up to $250,000 per co-owner.
- Certain retirement accounts: such as IRAs held as deposits, insured up to $250,000 per owner.
- Trust accounts: insured based on the number of beneficiaries, under rules updated in 2024.
The 2024 Change to FDIC Insurance for Trust Accounts
Since April 1, 2024, the FDIC has used a single, simpler formula for all trust accounts. The rule merged the former revocable and irrevocable trust categories into one “trust accounts” category. Each owner’s trust deposits are now insured up to $250,000 per beneficiary, for up to five beneficiaries, which sets a maximum of $1,250,000 per owner for all trust accounts at the same bank. Depositors can name more than five beneficiaries, but coverage does not rise above that cap.
The FDIC also offers an online tool, the Electronic Deposit Insurance Estimator (EDIE), that shows how the insurance rules apply to a specific set of accounts at a given bank.
What Happens to Deposits if a Bank Fails
When an FDIC-insured bank fails, the FDIC steps in to protect insured deposits up to the limits for each ownership category. In many cases, the failed bank is acquired by another FDIC-insured bank.
Deposits above the insurance limit are treated differently. According to the FDIC, uninsured depositors receive a receivership certificate for the remaining amount of their uninsured funds, which represents a claim on the failed bank’s assets rather than an insurance payment.
Disclaimer: This article is for informational purposes only and does not constitute financial, legal or investment advice. Readers should consult the FDIC or a qualified financial professional about their specific accounts.
FAQs
What does FDIC cover?
FDIC insurance covers deposit accounts at FDIC-insured banks, including checking, savings, money market deposit accounts and CDs. It does not cover investments such as stocks, bonds, mutual funds, annuities or crypto assets.
Are CDs FDIC insured?
Yes. Certificates of deposit at an FDIC-insured bank are deposits and are covered up to $250,000 per depositor, per bank, per ownership category, including interest.
What is the FDIC insurance limit in 2026?
The standard FDIC insurance amount is $250,000 per depositor, per FDIC-insured bank, per ownership category. Trust accounts can be insured up to $1,250,000 per owner under the rule in effect since April 2024.
What are FDIC ownership categories?
Ownership categories describe how accounts are legally owned, such as single accounts, joint accounts, certain retirement accounts and trust accounts. Each category is insured separately, even at the same bank.
What happens if a bank fails?
The FDIC protects insured deposits up to the limit, and in many cases the failed bank is acquired by another FDIC-insured bank. Funds above the limit are handled through receivership certificates.
