How Your FDIC Insurance Works for You

See Important Information Below

When you’ve worked hard to build up your finances, keeping them safe and secure is a great concern. That’s where Federal Deposit Insurance Corp. (FDIC) comes in. Do you know the ways you’re already protected, and how to further strengthen those safeguards?

There’s a lot of information out there, and it can be confusing to find what’s right for you. To help you out, we’ve compiled as much as we could in one place. Remember: everyone’s financial situation is unique, and you should always consult with a trusted financial advisor before making major decisions.

How does FDIC insurance work?

When you have your money at an FDIC-insured bank, there’s a built-in layer of security provided. In fact, the Federal Deposit Insurance Corp. has been insuring deposits in covered banks and savings associations since 1933.

There are many misconceptions about how much the FDIC insures. Luckily, there are many resources available online (including the FDIC itself) that can guide you to ways of maximizing your coverage.

The FDIC states that “the standard insurance amount is $250,000 per depositor, per insured bank, for each account ownership category.” However, when you dig into the details, there’s more to this than meets the eye. Because the FDIC bases that coverage on how the accounts are owned and titled, the FDIC points out there are ways to have more than $250,000 of deposit insurance coverage at one FDIC-insured bank.

If a covered institution fails, the FDIC insures funds in Certificate of Deposit (CD), checking, savings and money market accounts. It also covers other types of accounts, such as IRAs and trust accounts. Read through the resources below from the FDIC for some common coverage scenarios. You can also check out the FDIC Deposit Insurance brochure for details about your specific coverage.

How does FDIC insurance work on a joint account?

A “joint” account is considered an ownership category that is shared by two or more people and each person will receive up to $250,000. In addition to managing account ownership, your individual financial scenarios may allow you to find more ways to potentially boost your FDIC coverage. To find these, be sure to research the FDIC website for the full details. No matter your situation, always speak to your financial advisor for information about your FDIC coverage and making smart plans for your money.

How much is insurance coverage for a joint account?

For two people (for example, a married couple) with their own deposit accounts as well as their own IRA accounts, each individual can get insurance for $500,000, as described in the scenario above. Combined, that is $1 million in total coverage. 

Further, the FDIC points out: “If a couple has a joint money market deposit account, a joint savings account, and a joint CD at the same insured bank, each co-owner's shares of the three accounts are added together and insured up to $250,000 per owner, providing up to $500,000 in coverage for the couple's joint accounts.” So, with the addition of this $500,000, the couple’s total coverage comes to $1.5 million.

Do banks pay for FDIC insurance?

Yes, banks are not insured by default and are independently funded by charged premiums. Banks are not mandated to be FDIC insured, but it has become a point of competition among many institutions. If you want to find out if your bank is insured, you can visit the FDIC page.

Does FDIC insurance cover multiple accounts at the same bank?

The FDIC insurance covers deposits only. Things like stocks, bonds, mutual funds, life insurance policies, etc. are not insured. Accounts that are insured are as follows:

The FDIC insurance covers more than one account, but the total insured is still $250,000 (even though you have multiple accounts). If you had multiple “ownership” categories (i.e., joint accounts) you could receive more than the $250,000. In addition, if you have savings accounts open at another bank, those are also insured separately for the $250,000.

Have Questions?

We’re committed to providing innovative savings solutions designed to empower you to earn more—and save more. For additional information relating to FDIC insurance coverage, call the FDIC at 1-877-275-3342, or visit the FDIC website.

This article was helpful.