FDIC Insurance: You Can Bank On It

You’ve probably seen the gold logo that says “FDIC” displayed at your bank, on websites and in written communications from your bank. It’s one of those things that you see or hear about but may not give much thought to. FDIC stands for “Federal Deposit Insurance Corporation,” which is the U.S. government agency that protects bank deposits, up to a point. Here are several common questions along with the answers, to help you be informed about FDIC and its role in your financial security.

What is FDIC insurance?

This type of insurance protects money you deposit in an FDIC-covered bank, subject to limits, and makes sure your money is available when you need it. This is true even in the unlikely event that your bank goes out of business. According to the FDIC, consumers haven’t lost “even one penny” of their FDIC-insured money since the agency was created in 1933.

By the way, FDIC insurance applies to only money you’ve deposited in accounts at banks. So what if your money is in a credit union? Don’t worry. A different program — the National Credit Union Share Insurance Fund (NCUSIF) — insures credit union accounts.

Which accounts are FDIC-insured? Are some excluded?

FDIC insurance covers money in what are called “deposit accounts” at insured banks and savings associations. These accounts include:

  • Checking,
  • Negotiable orders of withdrawal (NOWs) or interest-earning checking,
  • Savings,
  • Money market,
  • Certificates of deposit (CDs), and
  • Cashier’s checks and money orders.

FDIC insurance isn’t available for the following types of investment accounts — even when purchased through your bank or savings association — because their values can fluctuate with the overall financial market:

  • Stocks,
  • Bonds,
  • Mutual funds,
  • Life insurance policies,
  • Annuities,
  • Municipal securities,
  • Government securities, and
  • U.S. Treasury securities.

How much FDIC insurance do I get?

In general, the FDIC insures each deposit account for up to $250,000 per account, per owner, at each bank. But things are more complicated for large depositors, so always check with your banker.

Here are some examples of how to calculate coverage:

  • A single account owned by one person, without any named beneficiaries, is covered for up to $250,000.
  • Joint accounts with two or more owners, without named beneficiaries, are insured up to $250,000 per co-owner. That means a married couple with an account totaling $350,000 would each be insured for half, or $175,000.
  • If a joint account held $500,000, the two co-owners would each be insured for $250,000.
  • If a joint account was valued at $700,000, each co-owner would have $250,000 of FDIC insurance coverage ($500,000 total). The remaining $200,000 in the account wouldn’t be FDIC insured.

Revocable trust accounts, along with certain IRAs and other retirement accounts, may also be eligible for $250,000 FDIC insurance per account owner.

How do I check my FDIC coverage?

The FDIC offers an anonymous, online estimating tool called “EDIE the Estimator” at www.fdic.gov/EDIE/calculator.html. EDIE stands for “Electronic Deposit Insurance Estimator.” You can answer the questions on the estimator and get a good idea whether your bank accounts are adequately insured. Individuals, businesses and government organizations can use EDIE to check how much FDIC-insurance coverage their accounts have.

You can also talk to your banker about your accounts or call the FDIC at 1-877-ASK-FDIC (1-877-275-3342).

How do I apply for FDIC insurance?

You don’t have to apply. The insurance automatically covers your funds as soon as you open a bank account in an FDIC-insured bank. And, unlike most insurance, you pay nothing for FDIC coverage.

Member banks pay premiums to join the FDIC. Those funds are invested and used to pay claims to depositors if they’re ever necessary.

How can I be sure that my bank has FDIC insurance — beyond just seeing the sign at the bank?

You can check with the FDIC directly. Go to their website at FDIC.gov and search for “BankFind” or call 1-877-ASK-FDIC (1-877-275-3342).

This article appeared in Walz Group’s February 13, 2023 issue of The Bottom Line e-newsletter, produced by Checkpoint Marketing.