The Federal Deposit Insurance Corporation, commonly known as the FDIC, was created as part of the 1933 Banking Act. This independent federal agency was established to restore trust in financial services institutions following the wave of bank failures that occurred during the early years of the Great Depression.
What is the Federal Deposit Insurance Corporation (FDIC), and do my accounts have FDIC protection?
The FDIC supplies deposit insurance to protect against loss in the event that an insured bank goes out of business. If this were to occur, customers’ deposits at the bank are guaranteed up to a certain limit. This insurance is paid out, usually within days of a bank’s closure, via a new account with another FDIC-member bank or a check for the account’s insured balance.
The FDIC also works with the failed bank to settle its debts, sell its assets, and process insurance claims for accounts that exceed the insured limit.
What’s not covered by FDIC insurance? Investments—even those purchased through an FDIC-member bank. This includes mutual funds, stocks, bonds, cryptocurrency, annuities, and life insurance policies.
FDIC Coverage Limits: Maximize Your Coverage
The limit for FDIC protection at a single insured bank is $250,000 per depositor for each account ownership category. Each account ownership category you have at that same bank is separately insured for $250,000. There are a variety of ownership categories (e.g., single, joint), and you can find a complete list of these on the FDIC website.
While opening accounts at different banks will help maximize your FDIC insurance, there are also efficiencies you can find with deposits held at the same institution.
To calculate your coverage, including any trusts, business accounts, and employee benefit plans, visit the FDIC Electronic Deposit Insurance Estimator (EDIE).
Benefits of FDIC insurance coverage
The primary benefit of FDIC coverage is clear—deposit insurance up to $250,000 per institution, per account holder, per ownership category type. Most banks are FDIC members, including online banks and brick-and-mortar institutions. Insurance applies automatically and is free to consumers. Member banks pay the required premiums.
Other FDIC FAQs
How do I know if my bank is FDIC-insured?
You can use the FDIC’s BankFind Suite, ask a bank representative, or look for the FDIC logo posted at their locations or on their websites. There are currently more than 4,500 institutions with membership in the FDIC. Credit unions are not covered by the FDIC and instead have their own insurance through the National Credit Union Share Insurance Fund.
What account types are covered?
Traditional deposit products, such as checking and savings accounts, CDs, and money market deposit accounts, are covered. Refer to the FDIC website for a complete list of insured products.
Does FDIC insurance cover multiple accounts?
Accounts per individual within the same ownership category are aggregated toward the limit for accounts in that category. For example, if someone has three individual accounts (without beneficiaries), and each account has $200,000, the depositor would only be FDIC-insured for up to $250,000.
How much does the FDIC insure per account?
Funds are insured up to $250,000 per individual, per institution, per ownership category. This includes, when applicable, interest earnings (up to the same threshold).
How do I get deposit insurance?
Coverage is automatic, assuming funds are held at an FDIC-insured bank. Banking customers don’t apply for or purchase FDIC deposit insurance.
How can I calculate my FDIC coverage
To calculate your estimated coverage from all eligible accounts, visit the official FDIC Electronic Deposit Insurance Estimator (EDIE).
What happens if my bank fails?
The FDIC has two roles in the unlikely event of a bank failure. First and foremost is repaying depositors up to their insured limit, via a check or a new account at an alternate insured bank. This usually happens within a few business days.
Secondly, the FDIC assists the failed bank with settling its debts, selling off its assets—which can take months or years—and processing claims outside of insured limits.
How long does it take to recover my insured deposits if my bank fails?
Historically, the FDIC has paid insurance within a few days of a bank closing (often the next business day). In special circumstances, such as deposits that exceed $250,000 or those overseen by a third party, the FDIC may need additional time or information to determine coverage.
Can the FDIC fail?
The FDIC has been around for nearly 100 years, and the agency notes: “Since FDIC insurance began in 1934, no depositor has lost a single penny of insured funds due to bank failure.” However, the FDIC does not have access to unlimited funds. If enough banks were to collapse simultaneously, it could deplete the agency’s funding source. If that happens, as it did in the early 1990s and 2009, the FDIC can borrow up to $100 billion from the U.S. Treasury, allowing customers to recoup their insured deposits despite the depletion of the agency’s funds.
(Deposit Insurance FAQs | FDIC, 2024)
Additional Reading:
What is FDIC insurance and how does it work?
What bank accounts are FDIC-insured?