FDIC Insurance Limit: The Ultimate Guide - MagnifyMoney

FDIC Insurance Limit: The Ultimate Guide

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been previewed, commissioned or otherwise endorsed by any of our network partners.
How MagnifyMoney Gets Paid ?
Advertiser Disclosure

You really shouldn’t sweat a bank failure. Not only is it uncommon, but if it does happen, the Federal Deposit Insurance Corporation (FDIC) insures balances up to $250,000 per depositor, per bank and per ownership category. If the above FDIC insurance limit seems low compared to what you have in the bank, there are some smart ways to get more coverage.

Key takeaways

  • At FDIC-insured institutions, your money is automatically covered up to $250,000 per depositor, per bank and per ownership category.
  • FDIC insurance does not cover investments.
  • You can increase your FDIC coverage in several ways.

What is the FDIC insurance limit?

When a bank is unable to meet its obligations to account owners, it fails. If the bank is a “Member FDIC” (most are), the FDIC steps in and either moves the bank’s assets to a healthy institution or pays back the insured deposits to the bank’s customers. That’s how FDIC insurance works. To find out whether your bank is covered, use the FDIC’s BankFind Suite tool.

But there are limits to what the FDIC will cover on your deposits. The FDIC insurance limit is up to $250,000 per depositor (you), per FDIC-insured bank (your bank) and per ownership category (how the account is owned). An ownership category is how you store your money at the bank, or rather, the type of legal ownership you have over the account.

Ownership categoryDefinitionCoverage limit
Single accountsAn account owned by a single person$250,000 per owner
Joint accountsAn account owned by two or more people$250,000 per co-owner
Certain retirement accountsLong-term, often tax-advantaged savings accounts$250,000 per owner
Business accountsA deposit account for business funds$250,000 per corporation, partnership or unincorporated association
Government accountsAccounts owned by the U.S., any state government, county, municipality, etc.$250,000 per official custodian (the person safeguarding the account)
Revocable trust accounts*An account associated with a trust that determines how your assets are to be handled after you pass$250,000 per owner, per unique beneficiary
Irrevocable trust accounts*An account associated with a nonchangeable trust that determines how your assets are to be handled after you pass$250,000 for the noncontingent interest of each unique beneficiary
Employee benefit plan accountsAccount associated with an employer-sponsored retirement plan$250,000 per plan participant

*A new, simpler rule will go into effect in April 2024 regarding coverage for revocable and irrevocable trust accounts. A deposit account owner’s trust deposits — revocable and irrevocable — will be insured for up to $250,000 for each beneficiary (up to five). This is regardless of contingencies.

Tip: The FDIC does not cover investments, such as bonds, stocks, mutual funds or cryptocurrency. However, the Securities Investment Protection Corporation (SIPC) insures your investments in the event of a brokerage firm failure.

3 examples of FDIC coverage

To put it in perspective, here are a few examples of how coverage can work across different types of legal ownership.

Single accounts

At the same bank, you have $250,000 in your personal account and your spouse has $250,000 in their personal account. Because each account has a single owner, they’re both fully insured. Your combined coverage equals $500,000.

Joint accounts

You and your spouse have a joint CD with a balance of $350,000. You both also have a joint savings account with a balance of $150,000 at the same insured bank. Because each co-owner is insured for up to $250,000, your combined FDIC insured amount would be $500,000, protecting the funds across both joint accounts.

Trust accounts

You alone own a revocable trust account with the maximum amount of beneficiaries (five). Because each unique beneficiary receives coverage for $250,000, your trust account would be insured for a total of $1,250,000.

Tip: Use the FDIC’s electronic deposit insurance estimator (EDIE) to calculate the coverage you’ll receive at a specific bank.

7 ways to get more FDIC coverage if your balance is over $250,000

To maximize the amount of coverage for your funds over the $250,000 threshold, here are some things you can do.

  • Open joint accounts: Maxed out your single account coverage? By opening a joint account with one or more people who you trust, you can expand your FDIC coverage beyond $250,000.
  • Open single accounts within a family: Every bank account is insured for $250,000. If you have funds as a family that exceed that and you’d like to keep the money available in deposit accounts, have family members open their own accounts rather than keeping money in one account.
  • Establish trusts with beneficiaries: Open an account associated with a living trust and choose up to five beneficiaries –– that’s five times the amount of coverage.
  • Open accounts at various banks: Each depositor is insured per bank, per ownership category. You can open accounts at the same bank, each under a different ownership category, or open a new account at more than one bank.
  • Use an IntraFi® Network DepositsSM: Formerly known as Certificate of Deposit Account Registry Service® (CDARS) and Insured Cash Sweep® (ICS), IntraFi® disperses your savings across several FDIC-insured deposit accounts, such as certificates of deposit (CDs).
  • Open a retirement account: Certain retirement accounts are insured by the FDIC. If you’ve exceeded your limit in other ownership categories, and are saving for retirement anyway, make sure you’re taking advantage of retirement accounts. Beneficiaries will not get you more coverage.
  • Open an account at a credit union: Just as banks are insured by the Federal Deposit Insurance Corporation, credit unions are insured the same way by the National Credit Union Administration (NCUA): $250,000 per depositor, per credit union and per ownership category.

Frequently asked questions

The FDIC insurance limit for 2022 is up to $250,000 per depositor (you), per FDIC-insured bank (your bank) and per ownership category (type of legal ownership over the account). This limit has remained the same since 2010.

A few ways to increase your FDIC insurance coverage: open a single account at more than one bank, open a joint account, open a certain retirement account or add beneficiaries to a revocable trust account.

If your bank fails, the FDIC steps in and moves the bank’s assets to an operational bank or pays you directly for your insured deposits. Either way, your money is insured for up to $250,000 per ownership category.

Yes. Money market accounts are deposit accounts, which means they’re FDIC-insured if your bank is a Member FDIC (most are).

Yes. Because the FDIC insures a joint account for $250,000 per co-owner of the account, it’s covered for a total of $500,000 if it has two co-owners.

Yes, FDIC insurance can span many accounts. That’s because your coverage is restricted to $250,000 per ownership category, per bank — there’s no limit to the number of accounts. Let’s say you have five single accounts at one bank — they’re all covered, up to $250,000 total.

Investments like bonds, stocks, mutual funds, life insurance policies, municipal securities, safe deposit boxes and U.S. Treasury bills are not insured by the FDIC.