FDIC Insurance: What's Covered and What Isn't

What FDIC Insurance Covers

The Federal Deposit Insurance Corporation insures deposits at member banks — and nearly every bank in America is a member. BankHealthData tracks 3,960 FDIC-insured banks holding a combined $22.9T in assets. The coverage limit is $250,000 per depositor, per insured bank, per ownership category.

FDIC insurance covers the following deposit products:

• Checking accounts — including interest-bearing and non-interest-bearing
• Savings accounts — traditional and high-yield
• Money market deposit accounts (not to be confused with money market mutual funds, which are NOT insured)
• Certificates of deposit (CDs) — all terms and denominations
• Cashier's checks, money orders, and other official items issued by the bank
• Negotiable Order of Withdrawal (NOW) accounts

What FDIC Insurance Does NOT Cover

Even if you purchase these products through an FDIC-insured bank, the following are NOT covered:

• Stocks, bonds, and mutual fund shares (including money market mutual funds)
• Annuities and life insurance policies
• US Treasury securities (these are backed by the government separately)
• Cryptocurrency and digital assets
• Contents of safe deposit boxes
• Losses from theft or fraud (contact your bank or law enforcement)

This distinction is critical in an era when banks increasingly offer investment products alongside traditional deposits. The investment side of your bank account — brokerage, advisory, wealth management — carries market risk and is not FDIC-insured. Investment products may be protected by SIPC (Securities Investor Protection Corporation) up to $500,000, but that covers brokerage firm failure, not investment losses.

Understanding Ownership Categories

The "per ownership category" part of the FDIC limit is the key to maximizing your coverage at a single bank. Each ownership category is separately insured up to $250,000. The main categories are:

• Single accounts: Accounts owned by one person — $250,000 coverage
• Joint accounts: Accounts owned by two or more people — $250,000 per co-owner (so a joint account with two owners is insured up to $500,000)
• Revocable trust accounts: $250,000 per beneficiary, up to five beneficiaries ($1.25 million maximum per owner)
• IRAs and other retirement accounts: $250,000 per owner across all retirement accounts at the same bank
• Corporation, partnership, and organization accounts: $250,000 per entity

A married couple could theoretically have $1.5 million insured at a single bank: $250,000 in each spouse's individual account ($500,000), $500,000 in their joint account, and $250,000 in each spouse's IRA ($500,000). Add a revocable trust and the number grows further.

What Happens When a Bank Fails

When the FDIC determines that a bank can no longer meet its obligations, it steps in as receiver. The resolution process follows a well-established playbook that has been refined through hundreds of bank failures:

1. Friday evening: Regulators close the bank after business hours, typically on a Friday
2. Weekend transition: The FDIC arranges for a healthy bank to acquire the failed bank's deposits (this is the most common outcome, called a "purchase and assumption" transaction)
3. Monday morning: Customers of the failed bank wake up as customers of the acquiring bank. ATM cards, checks, direct deposits, and online banking typically continue to function
4. If no acquirer is found: The FDIC mails checks to insured depositors, typically within two business days of closure

The 2023 failures of Silicon Valley Bank and Signature Bank were resolved within days. In both cases, all depositors — including those with uninsured balances — were protected through a special "systemic risk exception" invoked by regulators. However, this exception is not guaranteed for future failures, which is why staying within FDIC limits remains the safest approach.

The Deposit Insurance Fund

The Deposit Insurance Fund (DIF) is the pool of money the FDIC uses to pay insured depositors and cover resolution costs. It is funded by premiums paid by member banks — not by taxpayers. The DIF currently holds approximately $125-130 billion with a statutory minimum reserve ratio of 1.35% of insured deposits.

Even if the DIF were depleted (as it was briefly during the 2008 crisis), the FDIC has a $100 billion line of credit with the US Treasury, and Congress has historically authorized additional support when needed. The full faith and credit of the US government stands behind FDIC insurance, making it one of the strongest guarantees available to individual savers.

Neobanks, Fintech Apps, and FDIC Coverage

If you use a neobank or fintech app (Chime, Dave, Current, etc.), your deposits may be FDIC-insured — but through a partner bank, not the app company itself. This distinction matters: if the fintech company goes bankrupt (as happened with Synapse in 2024), your access to funds can be disrupted even though the underlying deposits remain insured at the partner bank.

Always verify which FDIC-insured bank actually holds your money when using fintech services. Check the fine print in the app or on the company's website for the name of the partner bank, then look up that bank's Health Score on BankHealthData. For essential funds (rent, bills, emergency savings), consider maintaining a direct account at a traditional FDIC-insured bank.

How to Maximize Your FDIC Coverage

If you have more than $250,000 to deposit, here are practical strategies to maximize your insurance coverage:

• Use multiple banks: Each bank provides a separate $250,000 limit. Spreading deposits across three banks gives you $750,000 in coverage.
• Use ownership categories: Open individual, joint, and retirement accounts at the same bank to multiply your coverage.
• Add beneficiaries: Payable-on-death (POD) or revocable trust designations add $250,000 of coverage per beneficiary.
• Use a deposit placement service: Services like IntraFi (formerly CDARS/ICS) automatically distribute your deposits across multiple banks while you maintain a single banking relationship. Each bank in the network provides $250,000 in coverage.
• Use the FDIC's EDIE calculator: The Electronic Deposit Insurance Estimator helps you calculate your exact coverage at any bank.

The Bottom Line

FDIC insurance is one of the most reliable guarantees in the financial system. Since 1933, no insured depositor has ever lost money. The $250,000 limit covers the vast majority of depositors, and strategies exist to extend coverage well beyond that limit. The key steps: verify your bank is FDIC-insured, keep each account within coverage limits, and check your bank's Health Score on BankHealthData for additional peace of mind.