Banks don't insure your money—the federal government does, up to a limit

The Federal Deposit Insurance Corporation (FDIC) insures deposits at member banks, not the banks themselves. The standard coverage is $250,000 per depositor, per bank, per account category. If your bank fails, the FDIC pays you directly up to that amount. Money beyond $250,000 at the same bank in the same account type is not covered and may be lost.

This protection applies only to FDIC-member banks, which include most traditional banks but not credit unions, investment firms, or money market funds. The coverage is automatic—you do not need to sign up or pay a fee. But the rules about what counts as a separate account can be confusing, and getting them wrong means losing money you thought was protected.

Key Takeaways

  • The FDIC covers up to $250,000 per person per bank per account type, and this limit has been in place since 2010.
  • Joint accounts, retirement accounts, and trust accounts are each counted separately, so a married couple can have $500,000 covered at one bank if the money is in the right account structure.
  • Coverage applies only to FDIC-member banks, which you can verify by searching the FDIC's bank database or looking for the FDIC logo on the bank's website or in the lobby.
  • Money in savings accounts, checking accounts, and money market accounts at the same bank counts toward the same $250,000 limit unless they are in different account categories.
  • If a bank fails, the FDIC typically transfers your account to another bank or mails you a check within days, not weeks.

The $250,000 standard coverage limit and what it protects

The FDIC covers deposits up to $250,000 per depositor, per insured bank, per ownership category. This means if you have $300,000 in a checking account at Bank A, the FDIC covers $250,000 and you lose $50,000 if the bank fails. The limit applies to the total of all your deposits in the same category at that bank—so a checking account and a savings account at the same bank both count toward the same $250,000 ceiling.

The $250,000 limit has been in effect since 2010. Before that, from 2008 to 2009, the FDIC temporarily raised it to $500,000 during the financial crisis, but it returned to $250,000 and has stayed there. This is the amount Congress set, and it does not change based on inflation or market conditions.

Coverage includes the principal and any interest that has accrued up to the date of the bank failure. If you have $240,000 in a savings account and it earned $15,000 in interest before the bank failed, the FDIC covers all $255,000 because the total is still under the limit. But if you had $245,000 and earned $15,000, only $250,000 is covered.

How joint accounts, retirement accounts, and trusts change the coverage amount

The FDIC counts different account ownership types separately, which means a married couple or a person with multiple account types can have more than $250,000 covered at the same bank. A joint account is insured separately from individual accounts, so if you and your spouse each have $250,000 in individual accounts and $250,000 in a joint account at the same bank, all $750,000 is covered.

Retirement accounts—including traditional IRAs, Roth IRAs, SEP-IRAs, and SIMPLE IRAs—are each insured separately from regular accounts and from each other. An IRA at Bank A is covered up to $250,000 separately from a checking account at the same bank. If you have both a traditional IRA and a Roth IRA at the same bank, they share the same $250,000 limit because they are both retirement accounts in your name.

Trust accounts are also counted separately. If you are the trustee of a trust account at a bank, that trust account has its own $250,000 coverage, separate from your personal accounts at the same bank. However, the rules for trust coverage are complex—the FDIC covers the trust up to $250,000 per beneficiary, not per trust, so a trust with five beneficiaries could theoretically have $1.25 million covered if structured correctly. For trusts, contact the FDIC or your bank to confirm the exact coverage.

Business accounts are insured separately from personal accounts. If you own a sole proprietorship and have a business checking account at Bank A, that account is covered separately from your personal checking account at the same bank, each up to $250,000.

Which banks are FDIC members and how to verify coverage

Not all banks are FDIC members. Most traditional banks are, but some smaller or online-only banks are not. Credit unions are not FDIC members—they are covered by the National Credit Union Administration (NCUA), which has the same $250,000 limit but operates separately. Investment firms, brokerage accounts, and money market mutual funds are not covered by the FDIC.

To check whether a bank is FDIC insured, search the FDIC's Bank Find tool at fdic.gov/resources/bankers/bank-find. Enter the bank name and state, and the tool will show you whether it is a member and what type of institution it is. You can also look for the FDIC logo in the bank's lobby or on its website—member banks are required to display it.

If you use an online bank, check its website for FDIC membership information, usually in the footer or a "Security" or "About Us" section. Some online banks are FDIC members; others are not. Do not assume based on the bank's size or reputation.

What happens to your money if a bank fails

When an FDIC-member bank fails, the FDIC takes over and either transfers your account to another bank or pays you directly. In most cases, the transfer happens within one to three business days. You will receive a notice in the mail explaining what happened and where your money is. Your account number and balance usually transfer with you, so you can keep using your debit card and online banking with minimal interruption.

If the FDIC cannot find a bank to take over your account, it will mail you a check for the amount covered (up to $250,000 per account category). This check arrives within a few days to a week, depending on mail delivery. The FDIC has never failed to pay covered deposits in full since it was created in 1933.

Money above the $250,000 limit is treated as a claim against the failed bank's assets. You may recover some of it if the bank's assets are sold, but this process takes months or years and you may not recover the full amount. This is why staying under the limit at each bank matters.

Strategies for protecting money over $250,000

If you have more than $250,000 to deposit, spread it across multiple FDIC-member banks. Each bank provides a separate $250,000 of coverage, so $500,000 across two banks is fully covered. This is the most straightforward approach and requires no special account structure.

You can also use different account categories at the same bank. A married couple could have $250,000 in individual accounts and $250,000 in a joint account at one bank, for $500,000 total coverage. A person with an IRA could have $250,000 in the IRA and $250,000 in a regular checking account at the same bank, for $500,000 total coverage.

Some banks offer "sweep" accounts that automatically move money above a certain threshold to other FDIC-member banks to keep all of it covered. Ask your bank whether it offers this service. The mechanics vary, but the goal is the same: keep your total at any one bank under $250,000 per account category.

Do not rely on a bank's own insurance or guarantees beyond FDIC coverage. Banks do not insure deposits—the FDIC does. If a bank advertises coverage above $250,000, it is either referring to FDIC coverage across multiple account categories or making a claim it cannot back up.

Coverage for special situations: POD accounts, custodial accounts, and more

A Payable on Death (POD) account is covered separately from regular accounts. If you name a beneficiary on a savings account, the FDIC covers that account up to $250,000 per beneficiary, not per account. So if you have a POD account with two beneficiaries, the FDIC covers up to $250,000 for each beneficiary, for a total of $500,000 coverage on that one account.

Custodial accounts for minors are covered separately from the parent's or custodian's own accounts. A custodial account in your name as custodian for your child is insured separately from your personal accounts, each up to $250,000.

Accounts held in an estate (after someone dies) are covered separately for a limited time. The FDIC covers the estate account for six months after the account holder's death, giving the estate time to settle and distribute the money. After six months, coverage ends.

Frequently Asked Questions

Does FDIC insurance cover my money if the bank makes bad investments?

No. FDIC insurance covers deposits only if the bank fails and cannot pay back what it owes. It does not cover losses from bad investments, fraud by the bank, or theft. If a bank invests your money poorly and loses it, that is a different problem—you would need to pursue a claim against the bank or report fraud to regulators, but FDIC insurance would not apply.

What if I have money in multiple banks—is each one covered separately?

Yes. Each FDIC-member bank provides its own $250,000 of coverage per account category. If you have $250,000 at Bank A and $250,000 at Bank B, all $500,000 is covered. The FDIC tracks coverage by bank, not by how many banks you use.

Are savings bonds, CDs, and money market funds covered by FDIC insurance?

Certificates of Deposit (CDs) at FDIC-member banks are covered the same way as savings accounts—up to $250,000 per bank per account category. Savings bonds issued by the U.S. Treasury are backed by the government directly, not the FDIC, so they are safe but through a different mechanism. Money market mutual funds are not FDIC insured. Money market accounts at banks are covered like savings accounts.

If I have a joint account with my spouse, is each of us covered for $250,000?

Yes. A joint account is covered up to $250,000 total for the account, but each owner is also covered separately for their own individual accounts at the same bank. So you could have $250,000 in a joint account and $250,000 in your individual account at the same bank, for $500,000 total coverage.

What if my bank is not FDIC insured—what covers my money?

If your bank is not FDIC insured, your deposits are not federally protected. Some banks carry private insurance, but it is not as reliable as FDIC coverage. Credit unions are covered by the NCUA, which works the same way as the FDIC. Before opening an account, verify that the institution is FDIC or NCUA insured using the Bank Find tool or by asking directly.