FDIC Insurance Explained: Limits, Categories and Gaps

FDIC insurance protects the money you keep in deposit accounts, such as checking, savings, money market deposit accounts and CDs, if an FDIC-insured bank fails. The standard limit is $250,000 for each depositor at each insured bank, in each ownership category, and credit union accounts get the same standard limit from the NCUA ^[1][2]. It does not cover stocks, bonds, mutual funds, annuities or crypto, and it does not protect you if a nonbank app or broker goes under. Below is how the limit works, how ownership categories can raise your coverage, and how to check a bank before you deposit.

What FDIC insurance is and how it works

The Federal Deposit Insurance Corporation insures deposits at member banks. The fund behind it, the Deposit Insurance Fund, is paid for by premiums that banks pay and by interest on U.S. Treasury securities the FDIC holds, and the U.S. government stands behind it with its full faith and credit ^[1]. The FDIC says no depositor has lost a penny of insured funds since it was founded in 1933 ^[1].

A few basics:

• You do not apply. Coverage starts on its own when you open a deposit account at an insured bank ^[3].
• It covers bank failure, not theft or fraud. Losses from theft or fraud are handled under other laws ^[3].
• It covers principal and interest. The FDIC pays your balance, dollar for dollar, plus interest earned up to the day the bank failed, up to the limit ^[3].
• Payment is usually fast. Often another insured bank buys the failed bank, and customers reach their money through the new bank. If not, the FDIC identifies depositors and pays them their insured amount ^[3].

Credit unions: NCUA share insurance

Credit union accounts are insured by the National Credit Union Share Insurance Fund, which Congress set up in 1970 and the NCUA runs ^[2]. The federal government guarantees it too, and it covers share draft (checking), share savings and share certificate accounts ^[2]. The standard limits mirror the FDIC's: $250,000 for individual accounts, $250,000 for a member's share of all joint accounts, and a separate $250,000 for IRAs ^[2].

One catch: a few state-chartered credit unions use private insurers instead, and that coverage is not backed by the U.S. government ^[2]. Federally insured credit unions must show the official NCUA sign at teller stations and on their websites ^[2].

What is covered and what is not

Sources for this table: ^[1][4].

Two items on the right side surprise people. Treasury bills, notes and bonds are not deposits, so the FDIC does not insure them, even when you buy them through your bank ^[1]. And a money market fund is a mutual fund, not a money market deposit account ^[1]. The NCUA follows the same pattern: it does not insure investments or insurance products sold at a credit union, safe deposit boxes or crypto ^[2].

The $250,000 limit and ownership categories

The limit applies three ways at once: per depositor, per insured bank and per ownership category ^[1]. An ownership category is the legal way you hold the account. The FDIC adds up all of your deposits in the same category at the same bank, whether they sit in checking, savings, a money market account or CDs ^[3]. Accounts at different branches of the same bank are not insured separately ^[5].

The main personal categories

There are also categories for businesses, employee benefit plans and government units ^[1].

Joint accounts

For joint coverage, every co-owner must be a living person, must have equal rights to withdraw, and must have signed the signature card, though that step is not needed for CDs and electronic signatures count ^[4]. Changing the order of names, or writing "and" instead of "or," does not raise coverage ^[5].

Example from the FDIC. Two people share a $350,000 joint CD plus a joint $150,000 savings account, both at one bank. Together that is $500,000, and it is fully insured, because each co-owner's share is $250,000 ^[5].

The limit applies to each person's total share of every joint account at that bank. In another FDIC example, Mary and John share a $230,000 money market account and a $250,000 savings account, and they also share a $270,000 CD with Robert. Mary's share of all three comes to $330,000, so $80,000 of it is uninsured; John is in the same position, while Robert's $90,000 share is fully covered ^[5].

Trust and payable-on-death accounts

Since April 1, 2024, trust deposits follow one formula: number of owners × number of distinct beneficiaries × $250,000, with a cap of $1,250,000 per owner for all trust accounts at the same bank ^[3]. So the cap is reached with five beneficiaries. You can name more than five, but coverage will not go higher ^[3]. The rule applies to existing and new trust accounts, including CDs ^[3].

Worked example. Ana owns a POD savings account naming her three children. Coverage: 1 owner × 3 beneficiaries × $250,000 = $750,000. If she adds two grandchildren as beneficiaries, coverage rises to $1,250,000. Adding a sixth beneficiary would not raise it.

Retirement accounts

All of a person's covered retirement deposits at one bank are added together and insured to $250,000, apart from that person's single and joint accounts ^[4]. The FDIC's own example: someone with a checking account, a savings account and an IRA at one bank is insured up to $250,000 for the two single accounts combined and separately up to $250,000 for the IRA ^[1].

Putting the categories together

The FDIC shows how a married couple with three children could have up to $3,500,000 of coverage at one bank, by using single, joint, POD trust and retirement accounts together ^[5]. You do not need a structure like that to be safe, but it shows that the limit is per category, not per bank.

Grace periods after a death or a merger

If an account owner dies, the FDIC insures the accounts as if the owner were still alive for six months, unless that would mean less coverage ^[5]. If two of your banks merge, deposits from the bank being acquired stay separately insured for at least six months, which gives you time to rearrange accounts that would now exceed the limit ^[5].

Fintech apps, sweep accounts and other pitfalls

Many people now hold money through an app or a brokerage that is not itself a bank. This is where coverage gaps appear.

Nonbanks are never FDIC-insured

The FDIC states that nonbank companies, including fintech apps, are never FDIC-insured themselves ^[6]. Money you send to one is not eligible for FDIC coverage until the company places it in an insured bank and other conditions are met ^[6]. Even then, FDIC insurance does not cover the nonbank's own insolvency or bankruptcy. You might get some or all of your money back through a court process, but that can take time ^[6].

How "pass-through" coverage works

When a third party deposits your money at a bank for you, coverage can "pass through" to you as if you had opened the account yourself. The FDIC lists three conditions ^[5]:

1. The bank's account records show that the account is held for others, for example "as agent" or "for the benefit of" customers.
2. Your identity and the amount you own can be found in the bank's records or in records the third party keeps.
3. You, not the third party, actually own the funds.

The FDIC checks these conditions after a bank fails, not before ^[5]. If they are not met, the money is treated as the third party's deposit and insured to that company for just $250,000 in total ^[7]. A warning sign: if a company promises you a higher rate than the bank actually pays, it may have created a debtor-creditor relationship, and the deposit may not qualify for pass-through coverage ^[7].

Pass-through deposits are also added to any other deposits you hold in the same category at the same bank. If a broker buys you a CD at a bank where you already have a checking account in your own name, the two are combined toward one $250,000 single-account limit ^[5].

Balances sitting inside payment apps

The CFPB found that money kept in payment apps such as PayPal, Venmo and Cash App may not be held in an insured account ^[8]. Payments you receive usually stay in the app balance instead of moving on their own to your linked bank account, and the company may hold or invest those funds ^[8]. If you use these apps, move balances you rely on into an insured account.

Other common mistakes

• Assuming two locations mean two banks. Coverage is per separately chartered bank, so deposits at two branches of one bank count as one ^[5]. Before splitting money, confirm that each bank is a separate institution in BankFind.
• Keeping over $250,000 in one category at one bank. The amount above the limit is uninsured.
• Trusting a "Member FDIC" logo on a website. Some fake bank sites misuse the FDIC name and logo ^[9].

How to check a bank or credit union

1. Look up the bank in FDIC BankFind. Search by the bank's name or its web address to see whether it is an actual insured institution ^[9]. Then make sure the name matches the site's address, and look for misspelled or rearranged letters ^[9].
2. For a fintech app, find the partner bank's name. Read the app's disclosures and terms to learn which insured bank holds your money, then look that bank up ^[6].
3. Estimate your coverage with EDIE. The FDIC's Electronic Deposit Insurance Estimator calculates how much of your money is insured ^[1].
4. For a credit union, use the NCUA's Credit Union Locator to confirm federal insurance, and the Share Insurance Estimator to work out coverage ^[2].
5. Ask the FDIC directly. Call 1-877-ASK-FDIC (1-877-275-3342) with questions about coverage or a site you doubt ^[1][9].

When to get professional help

If you are setting up a living trust, holding cash for a business, or keeping more than $250,000 at a single bank, a deposit insurance specialist at the FDIC can review how your accounts are titled. An estate planning attorney can help when beneficiary choices affect coverage. The FDIC's examples are for illustration and are not estate planning advice ^[5].

Frequently asked questions

Is interest covered too? Yes. Coverage includes interest earned through the date the bank fails, within the limit ^[3].

Are my IRA's stock funds covered if they are at a bank? No. Retirement coverage applies to deposits, such as an IRA CD. Stocks and mutual funds in the IRA are not insured deposits ^[1].

Is a credit union as safe as a bank? At a federally insured credit union, the NCUA standard limits match the FDIC's, and the NCUA says no one has lost a penny of insured funds at a federally insured credit union ^[2].

Your next step

List every deposit account you have, with its bank, how it is titled and its balance. Group the accounts by bank and by ownership category, then run the totals through the FDIC's EDIE tool or the NCUA's estimator. If any group is over $250,000, or if any money sits in an app, confirm the partner bank in BankFind and move funds as needed. To compare where to keep that cash, see our guide comparing savings accounts, CDs and money market options.