FDIC Insurance: How It Works

FDIC insurance, also referred to as deposit insurance, is a type of insurance that applies to deposits in bank accounts. This type of insurance means that you—and other depositors—don’t lose all your money if your FDIC-insured bank fails. And if you’re worried, remember that failures are rare at FDIC-insured banks.¹

Should a bank fail, another bank can step in and take over its assets and debts. In that case, your accounts are transferred over to the new bank. Nothing would change except the name of your bank.¹

When there’s no bank to take over, the FDIC steps in and does the following:

• Pays insurance to depositors who had accounts at the bank up to the FDIC insurance limit.
• Sells off the bank’s assets and settles its debts, including depositor claims that exceed the FDIC insurance limit.¹

There’s nothing you need to do to get FDIC insurance. You’re already covered if you have accounts at an FDIC-member bank.

How can you tell if a bank is FDIC-insured? Banks are required to display FDIC signage at branches and online, identifying them as members. You can also use the FDIC’s BankFind Tool to check a bank’s status.

FDIC coverage is not unlimited, and deposits are only protected up to certain amounts. The current FDIC coverage limit is $250,000 per account type, per depositor, per financial institution.²

The FDIC insurance limit applies to every FDIC-insured financial institution where you maintain accounts. So, say you have $250,000 in an account at Bank A, $100,000 in an account at Bank B, and another $50,000 in an account at Bank C. Since all three accounts are separate, you’re fully insured up to the FDIC limit at all three banks.

What if you have joint accounts with someone else, like a spouse or significant other? You’d each have the same $250,000 coverage limit even though you own an account jointly. The entire amount would be covered if the deposit amount doesn’t exceed $500,000.²

Your deposits would also be eligible for $250,000 in coverage because FDIC insurance applies to deposits per ownership type.

If trying to figure out how much coverage you have seems confusing, the FDIC has a deposit insurance calculator tool that can help.

No, Chime is not a bank and is not FDIC-insured.  However, your deposits are FDIC-insured up to applicable limits through Chime’s bank partners, The Bancorp Bank, N.A. or Stride Bank, N.A., Members FDIC.³

Fun fact: No covered depositor has lost a single cent of insured deposits since the FDIC was created in 1933.⁴

The FDIC insures a variety of deposit accounts held at banks. The types of accounts that can be FDIC-insured include:

• Checking accounts
• Negotiable order of withdrawal (NOW) accounts
• Savings accounts
• Money market deposit accounts (MMDAs)
• Time deposit accounts, also known as certificate of deposit accounts (CDs)
• Cashier’s checks, money orders, and other official items issued by a financial institution²

What about credit union accounts? The FDIC only insures banks, not credit unions. Instead, the National Credit Union Administration (NCUA) is responsible for insuring credit unions. Accounts are insured up to $250,000 per depositor.⁵

Aside from credit unions, the FDIC doesn’t insure non-deposit investment products or institutions that provide them. For example, the FDIC doesn’t insure deposits if you have an investment account at an online brokerage. Insurance companies are not covered either. The list of things the FDIC doesn’t insure includes:

• Stocks
• Bond investments
• Mutual funds
• Cryptocurrency
• Life insurance policies
• Annuities
• Municipal securities
• Safe deposit boxes or their contents
• U.S. Treasury bills, bonds, or notes²

Not all banks are FDIC insured; while most are covered, there are some banks that are not. Remember, the FDIC is just for banks and financial institutions. If you’re investing money, the FDIC doesn’t protect you against any potential losses if your investment doesn’t pan out. However, the Securities Investor Protection Corporation (SIPC) insures investors against the loss of cash or securities, up to $500,000, if their brokerage fails.⁶

If you have a bank account at an FDIC member bank, it’s a relief to know your money is protected up to the applicable limits. Even though bank failures are uncommon, it can be scary to hear about one on the news. FDIC insurance exists to give depositors like you peace of mind, so you don’t have to worry about your savings disappearing due to the failure of an FDIC-insured bank.