Brandon Lee
The Federal Deposit Insurance Corporation (FDIC) was created in 1933 to insure depositors' funds in the event of bank failure. FDIC-insured high-yield savings accounts are considered a safe place to keep emergency funds, as they are backed by the federal government. The standard FDIC insurance limit is $250,000 per depositor, per bank, for each type of account ownership category. However, some financial institutions, particularly fintechs and online banks, provide savers with FDIC coverage that exceeds this limit. For example, Wealthfront's Cash Account offers $5 million in FDIC coverage for individual accounts, while Stearns Bank offers up to $150 million in FDIC insurance through its Insured Cash Sweep (ICS) and Certificate of Deposit Account Registry Service (CDARS) programs.
| Characteristics | Values |
|---|---|
| FDIC insurance limit per depositor | $250,000 |
| FDIC insurance limit per owner for trust accounts with five or more beneficiaries | $1,250,000 |
| FDIC insurance coverage for deposits in different account categories at the same bank | More than $250,000 |
| FDIC insurance coverage for accounts at different banks | $250,000 per depositor for each account ownership category |
| FDIC insurance coverage for deposits exceeding $250,000 | Provided by some accounts, up to $3 million |
| FDIC-insured banks | Openbank, Peak Bank, EverBank, BrioDirect, TAB Bank, Bask Bank, Stearns Bank, Wells Fargo, Idaho First Bank |
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What You'll Learn
FDIC insurance covers up to $250,000 per depositor, per bank
The Federal Deposit Insurance Corporation (FDIC) protects up to $250,000 per depositor, per FDIC-insured bank, for each account ownership category. This includes the most common deposit account types, such as checking accounts, high-yield savings accounts, and certificates of deposit (CDs).
FDIC deposit insurance is automatic when you open a deposit account at an FDIC-insured bank, and it covers the balance of each depositor's account, dollar-for-dollar, up to the insurance limit. This includes the principal and any accrued interest through the date of the insured bank's failure.
If you have deposits in different account categories at the same FDIC-insured bank, your insurance coverage may exceed $250,000. For example, if you have a single ownership account and a joint ownership account at the same bank, you will be insured for up to $250,000 for your single ownership account deposits and separately for your ownership interest up to $250,000 for your joint ownership account deposits.
Additionally, if you have accounts at different FDIC-insured banks, the $250,000 limit applies at each bank, per depositor, for each account ownership category.
It's important to note that FDIC insurance does not protect against losses due to theft or fraud, which are covered by other laws. However, in the unlikely event of a bank failure, the FDIC acts quickly to ensure that all depositors receive prompt access to their insured deposits. Since 1934, no depositor has lost any of their FDIC-insured funds.
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Some banks offer FDIC coverage exceeding $250,000
The Federal Deposit Insurance Corporation (FDIC) typically insures deposits of up to $250,000 per person, per ownership category, per bank. This limit applies to each FDIC-insured bank, and the FDIC provides depositors with insurance within a few days of a bank closing.
However, some banks offer FDIC coverage exceeding $250,000. For instance, SoFi members who meet certain requirements can access up to $3 million of FDIC insurance on deposits through a network of participating banks. Similarly, Wealthfront's Cash Account provides $5 million of FDIC coverage for individual accounts and $10 million for joint accounts through partner banks. Betterment also offers FDIC insurance of $2 million for individual Cash Reserve accounts and $4 million for joint accounts.
In addition to these banks, Peak Bank, an online division of FDIC-insured Idaho First Bank, offers a high-yield savings account with no monthly fees and a $100 minimum deposit requirement. Openbank, a digital subsidiary of Santander Bank, offers an FDIC-insured savings account with no monthly fees but a minimum deposit requirement of $500.
For those with accounts exceeding $250,000, Stearns Bank provides ICS (Insured Cash Sweep) and CDARS (Certificate of Deposit Registry Service) programs, which extend FDIC protection across the full value of deposits. The ICS program provides FDIC insurance coverage of up to $125 million, while CDARS offers up to $50 million, with a total combination limit of $150 million.
Bank networks like IntraFi Network Deposits and Impact Deposits Corp. can help distribute excess deposits across multiple FDIC-insured banks to maximize coverage. Opening accounts with different ownership categories, such as joint accounts or trusts, can also increase FDIC insurance coverage.
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FDIC insurance covers different account categories
The Federal Deposit Insurance Corporation (FDIC) provides deposit insurance coverage to protect depositors against the failure of an insured bank. FDIC insurance covers different account categories, including checking accounts, high-yield savings accounts, and certificates of deposit (CDs). The standard insurance amount is $250,000 per depositor, per insured bank, per ownership category. This means that a person with multiple accounts in different ownership categories at the same bank may qualify for more than $250,000 in coverage. For example, a joint account held by two people is insured up to $250,000 per person, for a total of $500,000.
FDIC insurance covers various types of accounts, such as single and joint accounts, trust accounts, and certain retirement accounts. Trust accounts, including revocable and irrevocable trusts, have a maximum coverage of $1,250,000 per owner with five or more beneficiaries. Certain retirement accounts, such as pension plans and defined benefit plans, are also insured, with the FDIC insuring the deposit accounts owned by the plan.
In addition to traditional banks, FDIC insurance is also offered by some online banks and fintech institutions, providing coverage that may exceed the $250,000 limit. For example, Wealthfront offers $5 million of FDIC coverage for individual accounts and $10 million for joint accounts through partner banks. Similarly, Betterment provides $2 million of FDIC insurance for individual accounts and $4 million for joint accounts.
It is important to note that FDIC insurance does not protect against losses due to theft or fraud but focuses on ensuring that depositors have prompt access to their insured deposits in the event of bank failure. To determine if a bank offers FDIC insurance, individuals can search for the bank on the FDIC's BankFind tool or look for the FDIC insurance logo on the bank's website.
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FDIC insurance covers various types of accounts
FDIC insurance covers deposits in all types of accounts at FDIC-insured banks, but it does not cover non-deposit investment products, even if they are offered by FDIC-insured banks. FDIC insurance covers the most common deposit account types, including checking accounts, high-yield savings accounts, and money market deposit accounts (MMDAs). It also covers certificates of deposit (CDs) and Individual Retirement Accounts (IRAs). For example, if you have two single ownership accounts (such as a checking account and a savings account) and an IRA at the same FDIC-insured bank, you will be insured for up to $250,000 for the combined balance of the funds in the two single ownership accounts. You will also be separately insured for up to $250,000 for the funds in the IRA, as IRAs are in a different account ownership category.
FDIC insurance covers deposits according to the ownership category in which the funds are insured and how the accounts are titled. The standard deposit insurance coverage limit is $250,000 per depositor, per FDIC-insured bank, per ownership category. However, you may qualify for more than $250,000 in FDIC deposit insurance coverage if you deposit money in accounts that are in different ownership categories. For example, a revocable trust account with one owner naming three unique beneficiaries can be insured for up to $750,000. As of April 1, 2024, the maximum insurance coverage for a trust owner with five or more beneficiaries is $1,250,000 per owner for all trust accounts held at the same bank.
Some banks, such as Stearns Bank, offer programs like Insured Cash Sweep (ICS) and Certificate of Deposit Account Registry Service (CDARS) that extend FDIC protection beyond the standard $250,000 limit. These programs allow customers to access multi-million-dollar FDIC insurance coverage on their deposits.
Additionally, some financial institutions, particularly fintechs and online banks, provide savers with FDIC coverage that exceeds the $250,000 limit. For example, Wealthfront's Cash Account offers $5 million of FDIC coverage for individual accounts and $10 million for joint accounts through partner banks. Betterment also offers $2 million of FDIC insurance for individual Cash Reserve accounts and $4 million for joint accounts. SoFi offers access to $3 million of FDIC insurance on deposits through a network of participating banks.
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FDIC-insured banks provide peace of mind
FDIC-insured banks offer a safe and secure way to keep your money, especially in the wake of recent banking collapses, such as Silicon Valley Bank. While the standard FDIC limit of $250,000 is enough for most savers, some financial institutions now provide FDIC coverage that exceeds this limit. For example, Wealthfront's Cash Account offers $5 million in FDIC coverage for individual accounts and $10 million for joint accounts through partner banks. Similarly, SoFi offers access to $3 million in FDIC insurance through a network of participating banks.
For those with deposits exceeding the FDIC limit, certain banks like Stearns Bank offer programs such as Insured Cash Sweep (ICS) and Certificate of Deposit Account Registry Service (CDARS) that provide FDIC protection beyond the individual bank limit. These programs allow customers to access multi-million-dollar FDIC insurance while earning interest on their deposits. With FDIC-insured banks, customers can rest assured that their money is safe and that they will not lose their insured deposits even if their bank closes down.
FDIC-insured banks also provide additional benefits, such as high-interest rates, no monthly fees, and convenient ways to withdraw money. For example, Peak Bank, a new online division of FDIC-insured Idaho First Bank, offers a high-yield savings account with no monthly fees and competitive interest rates. Openbank, a digital subsidiary of Santander Bank, offers an FDIC-insured savings account with no monthly fees and a competitive annual percentage yield (APY). These banks not only provide peace of mind with FDIC insurance but also offer attractive features to help customers grow their savings.
Overall, FDIC-insured banks provide customers with the reassurance that their deposits are protected and that they will be compensated in the unlikely event of a bank failure. By insuring deposits and maintaining stability, the FDIC plays a crucial role in maintaining public trust in the banking system, allowing customers to confidently save and invest their money in FDIC-insured institutions.
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Frequently asked questions
The Federal Deposit Insurance Corporation (FDIC) protects up to $250,000 per depositor, per bank and per ownership category. However, some banks offer FDIC coverage that exceeds this limit. For example, Wealthfront's Cash Account offers $5 million in FDIC coverage for individual accounts.
The FDIC was created in 1933 to provide insurance protection for depositors of failed banks and to help maintain sound conditions in the nation's banking system.
When you visit a bank, whether in person or online, look for the FDIC Official Sign. This symbol indicates that the financial institution is backed by the FDIC.
Yes, FDIC insurance covers the most common deposit account types, including checking accounts, high-yield savings accounts, and certificates of deposit (CDs).
You can use the FDIC's Electronic Deposit Insurance Estimator (EDIE) to calculate your specific insurance coverage amount. This tool is available on the FDIC's website.
