Saving & Banking

What FDIC Insurance Covers (and What It Doesn't)

Money Basics Editorial Team Staff Writer · Jun 5, 2023 · 7 min read
What FDIC Insurance Covers (and What It Doesn't)

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FDIC insurance protects depositors up to set limits, but not every account or institution qualifies. Here's what the coverage actually includes.

Key Takeaways

  • FDIC insurance protects deposits up to $250,000 per depositor, per bank, per ownership category.
  • Checking accounts, savings accounts, money market deposit accounts, and CDs are all covered.
  • Investments like stocks, bonds, mutual funds, and crypto are not covered by FDIC insurance.
  • Coverage is automatic at any FDIC-member bank — no sign-up required.
  • Credit unions are not FDIC-insured but have their own equivalent federal protection through NCUA.

What FDIC Insurance Actually Is

The Federal Deposit Insurance Corporation (FDIC) was created in 1933 in response to widespread bank failures during the Great Depression. Its core job is straightforward: if an FDIC-insured bank fails, the agency makes sure depositors get their money back, up to the coverage limit.

That limit is currently $250,000 per depositor, per insured bank, per ownership category. The phrase "ownership category" is important — it means that different account types (individual, joint, retirement) are counted separately, which can give some depositors more total protection than they might expect.

Coverage is completely automatic. There's no application to file and no premium to pay. As long as your money is sitting in a deposit account at an FDIC-member bank, the protection is in place. If you're new to banking basics, our guide to everyday banking explains how standard deposit accounts work.

What FDIC Insurance Covers

FDIC insurance covers deposit accounts — the accounts where you put cash for safekeeping or everyday use. Covered account types include:

  • Checking accounts
  • Savings accounts
  • Money market deposit accounts (MMDAs)
  • Certificates of deposit (CDs)
  • Negotiable Order of Withdrawal (NOW) accounts

If you hold any of these at an FDIC-member bank and the bank closes, you're protected up to the limit. Notably, CDs are fully covered just like savings accounts. If you're weighing whether a CD is right for you, see our overview on how certificates of deposit work.

$250,000

Standard FDIC coverage limit per depositor, per bank

This limit applies per ownership category — meaning joint and individual accounts at the same bank can each qualify separately.

1933

Year the FDIC was established

The FDIC was created by the Banking Act of 1933 in response to thousands of bank failures during the Great Depression.

0 losses

Depositor losses on FDIC-insured funds since 1933

The FDIC reports that no depositor has ever lost a cent of insured deposits since the agency was founded.

What FDIC Insurance Does NOT Cover

This is where people frequently get tripped up. FDIC insurance only covers deposits — it does not cover investment or market-based products, even if a bank offers or sells them. The following are not covered:

  • Stocks, bonds, and mutual funds
  • Exchange-traded funds (ETFs)
  • Annuities
  • Life insurance products
  • Cryptocurrency and digital assets
  • Safe deposit box contents
  • U.S. Treasury securities (though these carry their own federal backing)

Banks often offer investment products alongside their deposit accounts — sometimes through the same app or branch. A product not being a deposit account means it's exposed to market risk, and FDIC insurance won't step in if its value drops or if the provider fails. Always check what type of account you're opening.

Money Market Accounts vs. Money Market Funds

A money market deposit account (MMDA) at a bank is FDIC-insured. A money market mutual fund — often offered by brokerages — is not. The names sound similar, but they are different products with different protections. Always confirm which type you're dealing with before assuming coverage applies.

How the $250,000 Limit Works in Practice

The $250,000 limit applies per ownership category, not just per account. That means a single person can have more than $250,000 covered at the same bank if the money is spread across different ownership structures.

For example, an individual account and a joint account at the same bank are treated as separate ownership categories. A retirement account like an IRA is another separate category. The FDIC publishes clear rules on how these categories work, and their Electronic Deposit Insurance Estimator (EDIE) at fdic.gov lets you calculate your coverage.

If you're unsure how your accounts are categorized, it's worth checking — especially if your combined balances at one institution approach or exceed $250,000. For definitions of terms like "ownership category" and "beneficiary," our banking terms glossary can help clarify the language.

Spread Large Balances Across Banks If Needed

If you regularly keep more than $250,000 in cash deposits, one straightforward strategy is to distribute funds across multiple FDIC-insured banks. Each institution's coverage limit applies independently, so this can expand your total insured amount. Talk to a financial professional about the best approach for your situation.

Credit Unions: A Similar (But Different) Safety Net

Credit unions are not FDIC-insured — but that doesn't mean your money there is unprotected. Most credit unions are insured by the National Credit Union Administration (NCUA), a separate federal agency that provides equivalent coverage: $250,000 per member, per insured credit union, per ownership category.

The practical protection is comparable to FDIC insurance. If you bank with a credit union, look for the NCUA seal or check the NCUA's website to confirm your institution's insured status.

This article is for general informational purposes only and does not constitute financial advice. For questions about your specific accounts or financial situation, consult a licensed financial professional.

Frequently Asked Questions

If your bank is FDIC-insured and your balance is within coverage limits, yes. The FDIC steps in to reimburse depositors up to $250,000 per depositor, per bank, per ownership category. In most bank failures, depositors have access to their funds within a few business days.
No. Stocks, bonds, mutual funds, ETFs, annuities, and similar investment products are not covered by FDIC insurance, even if they're held at a bank. Only deposit accounts like checking, savings, and CDs are protected.
You can look for the FDIC logo at your bank's branch or website, or use the FDIC's BankFind tool at fdic.gov to search by institution name. Most U.S. banks are FDIC members.
Yes, in certain situations. Coverage applies per ownership category, so a joint account and an individual account at the same bank can each qualify for separate coverage. Structuring accounts thoughtfully may increase your total protected balance.
No, credit unions are not FDIC members. However, most federally chartered and many state-chartered credit unions are insured by the National Credit Union Administration (NCUA), which offers equivalent coverage of up to $250,000.
No. Cryptocurrency is not a deposit product and is explicitly excluded from FDIC coverage. Even if you hold crypto through a bank's platform or app, those assets are not federally insured.

Money Basics Editorial Team

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Money Basics Editorial Team is the collective byline for our editorial team and contributor network. Articles published under this byline or an editorial pen name are researched, written, and reviewed according to our editorial standards for clarity, consistency, and independence before publication.

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