FSB Blog

FDIC Insurance Explained
April 3, 2023

In light of recent bank failures making national news, there have been many questions about FDIC Insurance - what is it? How does It work? Are my funds at my local bank covered? 

Rest-assured, though the national news puts a large spotlight on this issue, bank failure is actually rare, and at FSB we are very well positioned for the future, and we remain committed to the successful financial future of our customers.

What Is FDIC?

FDIC stands for Federal Deposit Insurance Corporation. The FDIC is an independent agency of the U.S. government that insures deposit accounts in U.S. banks and thrifts. The FDIC's purpose is to protect consumers' deposits in member financial institutions—so if a member bank fails, you can get your money back up to an eligible amount.

What Is FDIC Insurance?

An FDIC-insured account is a bank account whereby deposits are federally insured against bank failure or theft. FDIC insurance covers all types of deposit accounts up to $250,000, per account holder, ownership category, per FDIC-insured bank. Deposit products such as savings, checking, and money market accounts are covered, while investment products like mutual funds are not.

Coverage is automatic when you open a deposit account at a member financial institution. So, if your financial institution is FDIC-insured, there are no extra steps to sign up for and benefit from this insurance.

FDIC insurance covers the following deposit accounts and other official items issued by an insured bank:

  • Checking
  • Savings
  • Money market accounts
  • Certificates of deposit
  • Cashier's checks and money orders

What’s not covered:

  • Annuities
  • Investments in stocks, bonds or mutual funds
  • Losses incurred from investments, even if they were purchased from an insured bank
  • Life insurance policies
  • Contents of a safe deposit box housed at a bank
  • Municipal securities

U.S. Treasury bills, bonds and notes also aren't covered by FDIC insurance, but they are backed by the full faith and credit of the federal government.

FDIC Insurance Limits and Ownership Categories

What does it mean to have FDIC insurance coverage up to $250,000 per depositor, per institution and per ownership category?

Per depositor, per institution: This means that the FDIC insures deposits that one person (the depositor) owns in one insured bank (the institution), and that’s separate from any deposits that person owns in another, different insured bank. If a person owns deposits in different branches of the same insured bank, those deposits are counted together toward the $250,000 limit.

Per ownership category: Ownership category simply refers to who owns the account. The easiest distinction is between single, meaning an account owned by just one person, and joint, meaning an account shared by two or more people. Other kinds of ownership categories include certain retirement accounts, such as IRAs, trust accounts and employee benefit plan accounts.

There’s separate coverage for money that’s in different categories of ownership. So a person who has multiple accounts at an insured bank could qualify for more than $250,000 in coverage if their funds are in accounts that are in different ownership categories and other requirements are met. And if an account is co-owned by two people, for example, that account is insured up to $250,000 per person, for a total of $500,000.

How do I know if I am covered? 

Look for the FDIC insurance logo on the bank's website. Displaying this logo is a requirement for insured banks. The FDIC website also provides a useful calculator - Electronic Deposit Insurance Estimator (EDIE) - to determine how the insurance rules and limits apply to a depositor's specific group of deposit accounts—what's insured and what portion (if any) exceeds coverage limits at that bank. EDIE also allows the user to print the report for their records.

This blog is intended to be an informational resource for readers. The views expressed on this blog are those of the bloggers, and not necessarily those of FSB. This blog does not provide legal, financial, accounting or tax advice. The content on this blog is "as is" and carries no warranties. FSB does not warrant or guarantee the accuracy, reliability, and completeness of the content on this blog.