Short answer: FDIC insurance is a US government guarantee that protects the money you keep in deposit accounts at FDIC-insured banks if the bank fails. The standard limit is $250,000 per depositor, per insured bank, for each account ownership category. It covers checking, savings, money market deposit accounts and CDs, including the interest earned up to the date of failure. It does not cover stocks, bonds, mutual funds, crypto, annuities or the contents of a safe deposit box. You do not need to apply or pay for it: coverage is automatic when you open a deposit account at an insured bank.
This article is for general education only. It is not financial, legal or tax advice. Deposit insurance rules can change and depend on how your accounts are titled; check the official sources linked below or speak to a qualified professional about your own situation.
What Is FDIC Insurance?
The Federal Deposit Insurance Corporation (FDIC) is an independent US government agency created in 1933, after waves of bank failures during the Great Depression. According to the FDIC, no depositor has lost a penny of FDIC-insured funds since it was founded.
Deposit insurance is paid for by the banks, not by you. The FDIC runs the Deposit Insurance Fund, which is financed by premiums (called assessments) that insured banks pay and by interest earned on US government securities. The fund is backed by the full faith and credit of the United States government.
Two conditions must both be true for your money to be protected:
- the institution must be an FDIC-insured bank; and
- the product must be a deposit, not an investment.
You can check whether a bank is insured with the FDIC’s free BankFind Suite tool. Credit unions are covered by a separate scheme, the NCUA (see below).
What FDIC Insurance Covers (and What It Doesn’t)
The FDIC lists these products as covered when held at an insured bank:
- checking accounts and NOW accounts;
- savings accounts, including high-yield savings accounts;
- money market deposit accounts;
- time deposits such as certificates of deposit (CDs);
- cashier’s checks, money orders and other official items issued by the bank.
These are not covered, even if you bought them through an insured bank or its app:
- stocks, bonds and mutual funds (including money market mutual funds, which are investments, not deposits);
- crypto assets;
- life insurance policies and annuities;
- municipal securities;
- safe deposit boxes or their contents;
- US Treasury bills, bonds or notes. These are not FDIC-insured, but they are backed by the full faith and credit of the US government in their own right.
FDIC insurance also only protects you against the failure of the bank. It does not reimburse you for fraud, scams, unauthorized transfers or investment losses. For those, see agencies such as the Consumer Financial Protection Bureau (CFPB).
How the $250,000 Limit Actually Works
The phrase people remember is “$250,000 per account”, but that is not quite right. The FDIC’s wording is “$250,000 per depositor, per FDIC-insured bank, for each account ownership category.”
- Per depositor: the limit applies to a person (or entity), not to an individual account. Two savings accounts and a checking account in your sole name at the same bank are added together and share one $250,000 limit.
- Per insured bank: deposits at different FDIC-insured banks are insured separately. Different brand names that operate under one bank charter count as one bank.
- Per ownership category: money held in different legal ownership categories at the same bank is insured separately.
The main ownership categories are single accounts, joint accounts, certain retirement accounts (such as IRAs), trust accounts, employee benefit plan accounts, business accounts (corporations, partnerships and unincorporated associations) and government accounts.
Insurance covers principal plus interest accrued through the date the bank fails, up to the limit. If you hold $255,000 in a single account at a bank that fails, the FDIC explains that you would be paid $250,000 and would receive a claim against the failed bank’s estate for the uninsured $5,000.
How to Get More Than $250,000 of Coverage at One Bank
Because each ownership category is insured separately, a household can be fully covered for well over $250,000 at a single bank.
| Ownership category | FDIC coverage |
|---|---|
| Single accounts (one owner, no beneficiaries) | Up to $250,000 per owner, all single accounts at the bank combined |
| Joint accounts (two or more owners) | Up to $250,000 per co-owner for their share of all joint accounts at the bank combined |
| Certain retirement accounts (e.g. traditional and Roth IRAs) | Up to $250,000 per owner, all such retirement deposits at the bank combined |
| Trust accounts (including payable-on-death accounts) | Up to $250,000 per eligible beneficiary, per owner, capped at $1,250,000 per owner (five or more beneficiaries) |
A worked example using these rules: a married couple at one bank could hold up to $250,000 each in single accounts ($500,000), up to $500,000 in joint accounts ($250,000 for each spouse’s share) and up to $250,000 each in IRA deposits ($500,000). That is $1.5 million fully insured at one bank, before counting any trust accounts.
A few traps the FDIC highlights:
- Multiple joint accounts are combined. If you hold one $250,000 joint account with your spouse, another with your sister and a third with your brother at the same bank, your share of all three is added together and only $250,000 of it is insured.
- Opening more IRAs at the same bank does not add coverage. Two IRAs at one bank share a single $250,000 limit in the retirement category. If you are thinking about where to hold a Roth or traditional IRA in cash, this matters.
- Trust coverage changed in 2024. Since April 1, 2024, revocable trusts, irrevocable trusts and payable-on-death (POD) accounts are all in one “trust accounts” category. A trust owner is insured for $250,000 per eligible beneficiary up to a maximum of $1,250,000 per bank, however many beneficiaries are named. A beneficiary only counts once per owner, even if named on several accounts. Eligible beneficiaries are living people, charities and other IRS-recognized nonprofits, according to the FDIC’s guide Your Insured Deposits.
To check your own situation, use the FDIC’s Electronic Deposit Insurance Estimator (EDIE). You enter your accounts and how they are titled and it calculates how much is insured.
What Happens if Your Bank Fails?
Bank failures are rare, but they do happen. The FDIC usually handles them in one of two ways, as described on its payment to depositors page:
- Purchase and assumption. This is the most common method. A healthy bank takes over the failed bank’s insured deposits, and you automatically become its customer. Branches typically reopen the next business day and direct deposits are redirected automatically. The new bank may change your interest rate, but you can then withdraw your insured funds without penalty.
- Deposit payoff. If no bank takes over the deposits, the FDIC pays you directly by check up to the insured amount. Payments usually begin within a few days of the closing.
Federal law requires the FDIC to pay insured deposits “as soon as possible”, and the agency says its goal is to do so within two business days of the failure. Formal trust accounts or deposits placed through a broker can take longer. You do not need to file a claim for ordinary insured deposits. Interest stops accruing on the day the bank closes.
Fintech Apps and “Pass-Through” Insurance
Many popular money apps, payment services and “neobanks” are not banks themselves. They partner with one or more FDIC-insured banks to hold customer money. The FDIC’s consumer guide on banking with third-party apps is blunt about the risks:
- nonbank companies are never FDIC-insured themselves;
- your money is only eligible for insurance once the company actually deposits it at an insured bank, and only if records show who owns the money and how much each customer owns (this is called “pass-through” coverage);
- FDIC insurance does not protect you if the app company itself goes bankrupt. In that case you may have to wait for a court process to get some or all of your money back.
Before parking your emergency fund or paycheck in an app, read its terms, find the name of the partner bank and confirm it is insured on BankFind.
FDIC vs NCUA vs SIPC
Three different safety nets are often confused:
- FDIC insures deposits at banks: $250,000 per depositor, per bank, per ownership category.
- NCUA insures deposits (“shares”) at federally insured credit unions through the National Credit Union Share Insurance Fund. Its basic limits mirror the FDIC’s: $250,000 per member-owner for single accounts, with separate coverage for joint accounts, IRAs and trusts. See the NCUA’s share insurance page.
- SIPC (Securities Investor Protection Corporation) protects customers of failed member brokerage firms when cash and securities are missing from their accounts. Its limit is $500,000 per customer per separate capacity, including a $250,000 limit for cash. It does not protect against market losses. The SEC’s Investor.gov notes that SIPC is a non-government entity.
For UK Readers: FSCS Deposit Protection
The UK equivalent of FDIC insurance is the Financial Services Compensation Scheme (FSCS). Since 1 December 2025, it protects eligible deposits at UK-authorised banks, building societies and credit unions up to £120,000 per eligible person, per authorised firm, up from £85,000. Key points:
- It covers current accounts, savings accounts, cash ISAs and fixed-term savings bonds.
- Joint accounts are protected per person, so a two-person joint account can be covered up to £240,000, according to the Bank of England.
- Brands that share one banking licence count as a single firm, so check whether your banks are part of the same group.
- Temporary high balances, for example from selling your main home or receiving an inheritance, can be protected up to £1.4 million for six months.
- FSCS aims to pay most depositors within seven working days of a firm failing.
Frequently Asked Questions
Do I have to sign up or pay for FDIC insurance?
No. Coverage is automatic whenever you open a deposit account at an FDIC-insured bank. The cost is paid by banks through premiums to the Deposit Insurance Fund.
Is the FDIC limit $250,000 per account?
No. It is $250,000 per depositor, per insured bank, per ownership category. Several accounts in the same category at the same bank are added together.
Is the FDIC raising the $250,000 limit?
Not as of October 2026. Bills to expand coverage, mostly for business transaction accounts, have been introduced in Congress, but none has become law. The standard limit remains $250,000.
Are CDs bought through a brokerage account FDIC-insured?
Brokered CDs issued by an FDIC-insured bank can qualify for pass-through FDIC coverage if the broker keeps the required ownership records. They count toward your limit at the issuing bank, so add them to any money you already hold there.
Is money in Treasury bills covered by the FDIC?
No. Treasuries are not deposits, so they are not FDIC-insured, but they are backed by the full faith and credit of the US government.
The Bottom Line
FDIC insurance makes bank deposits one of the safest places to hold cash in the US, as long as the bank is insured, the product is a deposit and you stay within $250,000 per depositor, per bank, per ownership category. Check your bank on BankFind, use EDIE if your balances are large, and be careful with apps that are not banks. In the UK, the FSCS protects up to £120,000 per person, per firm.
