Most online savings accounts are FDIC insured, but the bank itself has to be FDIC insured first
An online savings account is FDIC insured if the bank holding it is an FDIC member bank. The FDIC does not insure based on where you open the account — online or in a branch — but based on whether the institution itself is covered. Nearly all online banks are FDIC members, but not all. You can check the FDIC's official bank search tool at banks.fdic.gov by entering the bank's name. If it appears in the results with an active status, your deposits are covered up to $250,000 per account category.
The catch is that FDIC coverage applies per account category at each bank, not per account. If you have a savings account and a checking account at the same FDIC member bank, each is covered separately up to $250,000. But if you have two savings accounts at the same bank under your own name, they are combined and covered together as one account category — so $250,000 total across both, not per account.
Key Takeaways
- Check whether your bank is FDIC insured by searching its name at banks.fdic.gov — this is the only authoritative source.
- FDIC coverage is $250,000 per account category per bank, so a savings account and checking account at the same bank are each covered separately.
- Online banks are FDIC insured if they are FDIC member banks, which most are, but you should verify before opening an account.
- If you have more than $250,000 at one bank, you can protect the excess by opening accounts in different categories — such as a joint account or an account in trust — each with its own $250,000 limit.
How to verify your bank's FDIC status before you deposit money
Go to banks.fdic.gov and use the "Bank Search" tool. Type in the bank's legal name — not the brand name. For example, search "Marcus by Goldman Sachs" as "Goldman Sachs Bank USA." The search will return the bank's FDIC certificate number, the date it was insured, and its current status. If the bank does not appear or shows an inactive status, your deposits are not FDIC insured at that institution.
Some online banks are not FDIC insured. They may be state-chartered banks that chose not to join the FDIC, or they may be fintech companies that do not hold deposits themselves but partner with a bank. If a fintech app says it partners with an FDIC member bank, search that partner bank's name, not the app's name. The FDIC insures the bank, not the app or platform.
If you cannot find the bank in the FDIC search, contact the bank directly and ask for its FDIC certificate number. A legitimate FDIC member bank will have this number and will tell you immediately. If they cannot or will not provide it, that is a red flag.
What FDIC coverage actually protects in an online savings account
FDIC insurance covers the balance in your account if the bank fails — meaning it closes and cannot return your money. It does not cover losses from fraud, hacking, or poor investment decisions. If someone steals your login credentials and withdraws money, that is a security breach, not an FDIC matter. If you move money into a risky investment through the bank's platform and lose it, FDIC insurance does not apply.
FDIC coverage also does not protect you if you deposit counterfeit money or if you knowingly deposit stolen funds. The FDIC covers legitimate deposits in a failed bank, not deposits that were themselves illegal or fraudulent.
The $250,000 limit is per account category per bank. If your online savings account balance is $180,000, you are fully covered. If it is $300,000, only $250,000 is covered by the FDIC, and you lose $50,000 if the bank fails. To protect the full $300,000, you would need to split it across two different account categories — for example, a savings account at one bank and a money market account at another, or a savings account in your name and a joint savings account with a spouse at the same bank.
Account categories that each have their own $250,000 FDIC limit
The FDIC recognizes several account categories, and each one is insured separately up to $250,000 at the same bank. Understanding these categories matters if you have more than $250,000 to deposit.
| Account Category | Who It Covers |
|---|---|
| Single account | Deposits in your name only |
| Joint account | Deposits owned by two or more people together; each owner's share is insured separately up to $250,000 |
| Account in trust | Deposits held in trust for a beneficiary; each beneficiary is insured separately up to $250,000 |
| Retirement account (IRA) | Individual Retirement Accounts; insured separately from other account types |
| Employee benefit plan account | Deposits held for an employee benefit plan; insured separately |
Example: You have $300,000. You could open a single savings account with $250,000 and a joint savings account with your spouse with $50,000. Both are fully covered because they are different account categories at the same bank. Or you could open a single account at one FDIC bank and a single account at another FDIC bank, splitting the $300,000 between them — each bank covers up to $250,000 separately.
What happens if an online bank fails
If your FDIC member bank fails, the FDIC steps in as the receiver. It will either arrange for another bank to take over your account, or it will pay you directly up to $250,000 per account category. The FDIC aims to have your money available within a few business days, though it can take longer in complex cases.
You do not have to do anything to receive FDIC coverage. You do not need to register, pay a fee, or sign up. If you have an account at an FDIC member bank, you are automatically covered. The FDIC maintains records of all deposits at member banks and pays out from its insurance fund if a bank closes.
Bank failures are rare. The FDIC has been in operation since 1933, and the vast majority of banks remain solvent. But FDIC insurance exists precisely for the scenario when a bank does fail, so your money is protected even if the bank's investments or loans go bad.
Online banks versus traditional banks: FDIC coverage is the same
An online bank's FDIC coverage works exactly the same way as a traditional bank's. The difference is that an online bank has no physical branches — you manage your account through a website or app. But if the online bank is FDIC insured, your deposits are covered the same way as deposits at a bank with a branch on your street.
Some online banks offer higher interest rates on savings accounts than traditional banks because they have lower overhead costs. That higher rate does not change FDIC coverage. A high-yield savings account at an FDIC member bank is still covered up to $250,000 per account category.
The only thing that matters for FDIC coverage is whether the bank itself is an FDIC member. Where you open the account and how you access it do not affect coverage.
Frequently Asked Questions
Can I have more than $250,000 at one online bank and still be fully covered?
Yes, if you use different account categories. For example, a single savings account ($250,000), a joint savings account with a spouse ($250,000), and an IRA ($250,000) at the same bank would each be covered separately. You can also split deposits across multiple banks, with each bank covering up to $250,000 per category.
If I move money between accounts at the same online bank, does that affect FDIC coverage?
No. Moving money between your accounts at the same bank does not change coverage. What matters is the total balance in each account category at that bank on the day the bank fails. Transfers between your own accounts do not create new coverage.
Does FDIC insurance cover money I earn in interest?
Yes. Interest earned on your deposit is part of your account balance and is covered up to the $250,000 limit. If you have $240,000 and earn $5,000 in interest, your total balance is $245,000, all covered.
What if my online bank is not FDIC insured?
Your deposits are not protected by the FDIC if the bank fails. Before opening an account, search the bank's name at banks.fdic.gov. If it does not appear, ask the bank directly why it is not FDIC insured and whether it has other insurance or protections in place.
Do I need to do anything to activate FDIC coverage on my online savings account?
No. FDIC coverage is automatic for all deposits at FDIC member banks. You do not need to register, pay a fee, or take any action. Simply having an account at an FDIC member bank means you are covered.