FDIC insurance protects your money in a savings account up to $250,000 per depositor, per bank

FDIC stands for Federal Deposit Insurance Corporation. It is a government agency that insures deposits you hold at banks and credit unions. If your bank fails, the FDIC pays you back up to $250,000 for each account you own at that institution. This protection applies to savings accounts, checking accounts, money market accounts, and certificates of deposit (CDs).

Most savings accounts at traditional banks and credit unions are automatically covered by FDIC insurance. You do not need to sign up for it or pay a fee. The coverage is there whether you know about it or not. However, online banks, credit unions, and brick-and-mortar banks all operate under the same FDIC rules, so the protection level is identical.

The $250,000 limit is per depositor, per bank. If you have $300,000 in one savings account at Bank A, only $250,000 is covered. If you have $200,000 at Bank A and $200,000 at Bank B, both amounts are fully covered because they are at different institutions. The FDIC counts each bank separately, even if they are owned by the same parent company.

Key Takeaways

  • FDIC insurance covers up to $250,000 per person per bank, and it is automatic at all participating banks and credit unions.
  • The $250,000 limit resets for each separate bank, so splitting money across institutions increases your total coverage.
  • Joint accounts, retirement accounts, and trust accounts have separate coverage limits, so a married couple can protect up to $500,000 in a joint savings account.
  • Online banks and credit unions offer the same FDIC protection as traditional banks, so the coverage does not depend on where you open the account.
  • Money held outside a bank — in stocks, bonds, mutual funds, or cash under your mattress — is not covered by FDIC insurance.

How the $250,000 limit works across multiple accounts and account types

The FDIC counts coverage by ownership category, not by the number of accounts you hold. If you have three separate savings accounts at the same bank all in your name alone, the FDIC adds them together and covers only $250,000 total across all three. Opening multiple accounts at one bank does not increase your coverage.

However, different ownership categories have separate $250,000 limits. A joint savings account with your spouse is covered up to $250,000. Your individual savings account at the same bank is covered up to another $250,000. A savings account you hold in trust for your child is covered up to a third $250,000. This means a married couple can protect up to $500,000 in a joint account plus additional amounts in individual accounts at the same bank.

Retirement accounts (IRAs, 401(k)s held at a bank, and similar accounts) have their own $250,000 coverage limit separate from your regular savings account. A payable-on-death (POD) account — where you name a beneficiary — also has its own limit. The FDIC website has a coverage calculator that shows exactly how much of your money is protected based on how you own each account.

Which banks and credit unions are FDIC insured

All banks that accept deposits from the public and are chartered by a state or the federal government must carry FDIC insurance. You can search the FDIC's official bank database to confirm whether a specific bank is covered. The search tool is free and shows you the exact coverage limits for each account type at that institution.

Credit unions are not covered by the FDIC. Instead, they are insured by the NCUA (National Credit Union Administration), which offers the same $250,000 per depositor, per credit union protection. The rules are nearly identical to FDIC coverage, so your money is protected the same way whether you bank at a credit union or a bank.

Online banks are FDIC insured if they are chartered banks. Most major online banks (Ally, Marcus, Discover, and others) are FDIC insured. However, some financial companies that offer savings products are not banks and are not insured. Before you open an account, check whether the company appears in the FDIC bank database or is a federally chartered credit union.

What happens to your money if a bank fails

If your bank fails, the FDIC steps in and pays depositors directly. You do not have to file a claim or wait for a lawsuit. The FDIC typically pays within a few business days, though the exact timeline depends on how complex your account structure is. If you have multiple accounts at the failed bank in different ownership categories, the FDIC processes each one separately.

The FDIC does not transfer your account to another bank automatically. Instead, it sends you a check or deposits the insured amount directly into an account you designate. You will receive notice from the FDIC about how to receive your payment. If your account balance exceeds $250,000, you lose the amount over the limit — there is no recovery process for uninsured funds.

Bank failures are rare in the United States. The FDIC has been in operation since 1933, and most depositors have never experienced a bank failure. However, FDIC insurance exists precisely because bank failures can happen, and the insurance protects you if they do.

What FDIC insurance does not cover

FDIC insurance covers only money you deposit in a bank account. It does not cover investments held at a bank, such as stocks, bonds, mutual funds, or brokerage accounts. If your bank has a brokerage division and you buy stocks through it, those stocks are not FDIC insured — they are covered by different protections (SIPC insurance for brokerage accounts).

Safe deposit boxes are not covered by FDIC insurance. If you store valuables, documents, or cash in a safe deposit box at your bank and the bank fails, the FDIC does not reimburse you for the contents. Safe deposit boxes are the bank's responsibility, and the bank typically carries its own insurance for them.

Money you lend to someone else, even if you deposit it in a bank account in their name, is not covered by FDIC insurance if the person you lent it to is not a family member or legal dependent. The FDIC covers only deposits you own or co-own. If you give money to an adult child and they hold it in their own account, only they are protected by FDIC insurance.

Strategies for protecting more than $250,000

If you have more than $250,000 to save, you can spread your money across multiple banks to increase your FDIC coverage. Each bank counts as a separate institution, so $250,000 at Bank A and $250,000 at Bank B are both fully covered. This strategy is called "laddering" or "spreading," and it is straightforward to set up.

You can also use different ownership categories at the same bank. A joint account with your spouse, an individual account in your name, and a trust account all have separate $250,000 limits at the same bank. If you are married and want to protect $500,000 in savings, a joint account covers all of it at one bank.

Some people use both strategies together: a joint account at Bank A, an individual account at Bank B, and a trust account at Bank C. This approach requires you to manage multiple accounts and remember which bank holds which money, so it works best if you have a clear system for tracking them.

Frequently Asked Questions

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

Yes. FDIC insurance protects your deposits regardless of why the bank fails. Whether the bank made poor loans, lost money on investments, or faced any other problem, your deposits up to $250,000 are covered. The insurance exists to protect you from bank failure, not to protect the bank from its own mistakes.

If I have $300,000 in one savings account, can I move $50,000 to another account at the same bank to protect it?

No. The FDIC counts all accounts in your name at the same bank together. If you have $300,000 split across three accounts at Bank A, only $250,000 total is covered. To protect the extra $50,000, you would need to move it to a different bank.

What if I have a savings account and a checking account at the same bank?

Both accounts are added together for FDIC coverage purposes. If your savings account holds $150,000 and your checking account holds $120,000 at the same bank, the FDIC covers only $250,000 total across both accounts. The remaining $20,000 is uninsured.

Are money market accounts covered by FDIC insurance?

Yes, if they are held at an FDIC-insured bank. Money market accounts are treated the same as savings accounts for insurance purposes and are covered up to $250,000 per depositor per bank. However, money market funds (which are investments, not bank accounts) are not FDIC insured.

Do I need to tell my bank I want FDIC insurance?

No. FDIC insurance is automatic at all participating banks. You do not need to sign up, pay a fee, or take any action. The coverage applies to your account whether you know about it or not.