Are All Bank Accounts Insured by the FDIC?

Federal Deposit Insurance Corp. (FDIC) provides insurance for the vast majority of bank accounts, although some banks do not have FDIC protection. Learn how FDIC insurance keeps your money safe, about the limits of protection, and which assets are typically insured.

What Does it Mean to Be FDIC-Insured?

The FDIC is an independent agency of the U.S. government that protects you against loss of deposit if your bank or thrift institution fails and is FDIC-insured. To keep public confidence, the federal government created the agency during the Depression in 1933.

When you open a bank account like a checking account or savings account, you expect the money you deposit to be safe. These accounts don't work as a personal vault. Instead, banks usually keep a certain amount of cash on hand, but the majority of your money is lent out so the bank can make money.

When banks can't keep up with the demand for withdrawals, they may have to turn depositors away. When more customers want their money and can't get it, they end up losing confidence, resulting in a panic.

This, in turn, can trigger a domino effect, leading to a failure in the banking system like during the Great Depression. FDIC insurance keeps your money safe in such situations.

So, if you have money in an FDIC-insured bank account and the bank fails, the agency reimburses you for any losses you incur.

Many banks use the fact that they're insured as a selling point, even though most bank accounts have FDIC protection. In other words, an uninsured bank can't compete effectively in an industry where consumers expect their money to be protected. To see if your bank is FDIC-insured, check out the FDIC Bank Find Suite page.

What Does FDIC Insurance Cover?

The FDIC doesn't insure all type of accounts. Insured accounts include negotiable orders of withdrawal (NOW), money market deposit accounts (MMDA), checking accounts. savings accounts, and certificates of deposit (CD). FDIC insurance covers the principal and interest of an account, not exceeding the $250,000 limit.

If you have a savings account with a balance of $50,000 and a CD with a $150,000, both accounts are insured, as they fall under $250,000. If you and your spouse have a joint account with a $250,000 balance and $200,000 in another eligible account, both accounts are covered, as their combined value falls under the $250,000 per co-owner rule.

What Does FDIC Insurance Not Cover?

The FDIC doesn't cover all types of accounts. Financial instruments, such as stocks, bonds, money market funds, cryptocurrency, U.S. Treasury securities (T-bills), safe deposit boxes, annuities, and insurance products aren't insured by the FDIC.

Frequently Asked Questions (FAQs)

The Bottom Line

The FDIC protects bank account holders against loss, up to a certain amount, if their bank or thrift institution fails. However, not all banking institutions or types of financial accounts are insured by the FDIC. Eligible bank accounts like savings accounts, CD accounts, and checking accounts are insured up to $250,000 for principal and interest.

Usually, banks will advertise this protection for their customers, or you can ask a banker when considering opening a new account. If your money is deposited in a credit union, be aware that the FDIC doesn't insure those accounts, but they are covered by the NCUA.