There can be some confusion around FDIC insurance coverage for bank accounts, especially when you have multiple bank accounts. As we’ve all witnessed, banks sometimes do fail and this deposit insurance can mean the difference between keeping or losing your money.
What is FDIC Insurance?
FDIC insurance is designed to protect depositors’ funds in banks and savings institutions. The program is run by the Federal Deposit Insurance Corporation (FDIC) which is an agency of the US government. This agency was created in the midst of the Great Depression in 1933 to reassure people that it was safe to put their money in banks.
This insurance program provides depositor protection backed by the full faith and credit of the US government and no FDIC insured funds have ever been lost due to bank failure. But not all bank accounts are insured accounts and there are dollar limits on the insurance.
What Types of Accounts are FDIC Insured?
A variety of accounts, including checking accounts, savings accounts, certificates of deposit and money market accounts can be covered.
To be insured, an account must be held in a bank or savings institution that participates in the FDIC program. Banks often put the FDIC logo on their doors, paperwork and websites to notify depositors that they participate in the program.
How Does it Work?
Covered accounts are insured up to $250,000 per depositor and per bank. Accounts held in more than one name or in different styles of ownership (e.g., joint accounts, Trust accounts, retirement accounts) are also insured.
The following table shows a quick list of accounts and coverage. The best way to find out how much coverage you have (or don’t have) is to use the FDIC’s Electronic Deposit Insurance Estimator tool (EDIE) on the FDIC website or ask your banker for details.
FDIC Insurance Coverage:
|Type of Account||Coverage Amount|
|Single Accounts||$250,000 per owner|
|Joint Accounts||$250,000 per co-owner|
|Certain Retirement Accounts, including IRAs||$250,000 per owner|
|Revocable Trust Accounts
|$ 250,000 per owner per beneficiary up to 5 beneficiaries (more coverage available with 6 or more beneficiaries subject to specific conditions and requirements)|
|Corporation, Partnership and Unincorporated Association Accounts||$ 250,000 per corporation, partnership or unincorporated association|
|Irrevocable Trust Accounts||$ 250,000 for the non-contingent, ascertainable interest of each beneficiary|
|Employee Benefit Plan Accounts||$ 250,000 for the non-contingent, ascertainable interest of each plan participant|
|Government Accounts||$ 250,000 per official custodian|
What about Investment Accounts at Banks?
Stocks, mutual funds, bonds, annuities and any type of investment that is not a deposit account (e.g., checking, savings) is NOT covered, even if it held at an FDIC insured banking institution.
Understanding your coverage can help you to protect your deposits and savings. Because the coverage is by institution as well as by depositor, it is possible to extend your coverage by using multiple banks and accounts.
Check out EDIE or the FDIC website to find out about your current level of protection and how to improve it.