What Is FDIC Insurance and What Are the Coverage Limits?

With FDIC insurance, the federal government protects your money held in a bank if your bank fails. But there are coverage limits.

Key takeaways about FDIC insurance

Federal Deposit Insurance Corp. insurance keeps your money safe if your federally insured bank fails.
The FDIC insures up to $250,000 per depositor, per institution, and ownership category.
FDIC insurance covers deposit accounts and other official items such as cashier’s checks and money orders.
If a bank is federally insured, it will have the FDIC insurance logo on its website.

Banks are safe and stable places to store your money. Still, recent history has reminded us that these institutions can fail, meaning they can no longer meet their obligations to the people who have deposited money with them or to those they’ve borrowed from.

In the rare case that a bank fails, a customer’s money is protected as long as a bank is federally insured. A federally insured bank is backed by the Federal Deposit Insurance Corp. Credit unions offer protection as well through the National Credit Union Administration. The FDIC insures up to $250,000 per depositor, per institution, and per ownership category. FDIC insurance kicks in only if a bank fails.

What it means to have FDIC insurance

Having FDIC insurance means that your money, up to a certain amount, is safe if your bank fails. The FDIC was established in 1933 due to the many bank failures during the Great Depression^[1]. It was created to promote public confidence in the banking system by insuring consumers’ deposits. Dozens of banks went under as a result of the Great Recession. In 2023, Silicon Valley Bank (California), Signature Bank (New York), and First Republic Bank (California) failed. In 2020, Ericson State Bank (Nebraska), The First State Bank (West Virginia), First City Bank of Florida, and Almena State Bank (Kansas) failed. Still, since the creation of the FDIC, not one cent of insured deposits has been lost^[1].

Banks aren’t insured by default. They apply for FDIC insurance, which comes at a cost like most forms of insurance. But you don’t pay a monthly fee, nor do your tax dollars foot the bill. The bank pays the premiums.

FDIC insurance limits and ownership categories

What does it mean to have FDIC insurance coverage up to $250,000 per depositor, per institution, and per ownership category?

Per depositor, per institution: This means that the FDIC insures deposits that one person (the depositor) owns in one insured bank (the institution), and that’s separate from any deposits that person owns in another, different insured bank. If a person owns deposits in different branches of the same insured bank, those deposits are counted together toward the $250,000 limit.

Per ownership category: The ownership category simply refers to who owns the account. The easiest distinction is between single, meaning an account owned by just one person, and joint, meaning an account shared by two or more people. Other kinds of ownership categories include certain retirement accounts, such as IRAs, trust accounts, and employee benefit plan accounts.

There’s separate coverage for money that’s in different categories of ownership. So a person with multiple accounts at an insured bank could qualify for more than $250,000 in coverage if their funds are in accounts in different ownership categories and other requirements are met. And if an account is co-owned by two people, that account is insured up to $250,000 per person, for a total of $500,000.

Here are the different FDIC ownership categories and the respective insurance limits^[2]:

Corporation, partnership, and unincorporated association accounts	$250,000 per owner (aka depositor).
Joint accounts (owned by more than one person)	$250,000 per co-owner.
Certain retirement accounts, including IRAs	$250,000 per owner.
Revocable trust accounts	$250,000 per depositor per unique beneficiary.
Irrevocable trust accounts	$250,000 per unique beneficiary entitled to the account.
Employee benefit plan accounts learn more	$250,000 per corporation, partnership or unincorporated association.
Government accounts examples	$250,000 per plan participant entitled to the account.
Government accountsExamples	$250,000 per official custodian.

Examples of FDIC insurance limits and coverage

Consider some examples to understand the limits of FDIC coverages.

1. You’re single, do your banking in one place, and you have:

$50,000 in a checking account.
$100,000 in a savings account.
$200,000 in certificates of deposit.

That’s a total of $350,000 deposited in one bank as one depositor (you), at one institution (your bank), and in one ownership category (single). If your bank were to fail, you’d lose $100,000 because the FDIC would cover only up to $250,000.

Don’t fret, though, because the next-most important thing to know about FDIC coverage is that you can be insured for much more depending on where you keep your accounts and how they are owned. To ensure all your money is insured, spread it across multiple institutions. Consider the next example.

2. You’re single, but you do your banking at two banks, and you have:

$50,000 in a checking account at Bank 1.
$200,000 in a savings account at Bank 1.
$250,000 in certificates of deposit at Bank 2.

That’s a total of $500,000 deposited as one depositor (you) at two institutions (two banks) and in one ownership category (single). Since you have $250,000 at one bank and $250,000 at another, all of your money is protected.

Take a look at one more example of how different ownership categories affect how your money is insured.

3. You’re married, you both do your banking at the same place, and together you have:

$500,000 in a joint savings account shared with your spouse.
$250,000 in a certificate of deposit in just your name.

That’s a total of $750,000. All of this money is protected. The joint savings account is one ownership category (joint), where both you and your spouse are covered up to $250,000 each since you are two different depositors. The certificate of deposit is in a second ownership category (single), so the depositor (you) is covered up to $250,000 for that account.

There are too many combinations to cover them all here. Just know that you have options to ensure all your money is insured. If you’re in danger of bumping up against or exceeding the $250,000 limit at any one institution, consider spreading your money across multiple banks so that all of your funds are insured.

How to find out if your bank is FDIC insured

To determine whether your deposits are federally insured, search for your bank on the FDIC’s BankFind tool. You can also look for the FDIC insurance logo on the bank site. Displaying this logo is a requirement for insured banks. You can check the FDIC site to see how the official logo should appear.