How U.S. Bank Deposit Insurance (FDIC) Works
The FDIC is a federal system that protects a depositor's money with a government guarantee even if the bank fails. Coverage is automatic, up to $250,000 per depositor, per insured bank, for each ownership category. Here is how it works.
The FDIC — the Federal Deposit Insurance Corporation — is an independent federal agency created by Congress in 1933 that began insuring bank deposits in 1934. It was established after the wave of bank failures in the 1920s and early 1930s wiped out many Americans' savings, in order to restore and maintain public confidence in the financial system (Source: FDIC — About the FDIC; FDIC — Deposit Insurance At A Glance).
How much is insured
The standard insurance amount is $250,000 per depositor, per insured bank, for each account ownership category (FDIC, Deposit Insurance At A Glance). In other words, the limit is not applied to a single account or a single person overall, but separately for each bank and each ownership category (Source: FDIC — Deposit Insurance At A Glance; FDIC — Understanding Deposit Insurance).
What is covered and what is not
Insurance covers only deposit products: checking accounts, savings accounts, money market deposit accounts, and certificates of deposit (CDs). It does NOT cover mutual funds, annuities, life insurance policies, stocks and bonds, crypto assets, or the contents of safe deposit boxes — even if they were bought through the bank (Source: FDIC — Deposit Insurance).
Ownership categories and raising coverage
Deposits in the same ownership category at the same bank are added together for the $250,000 limit. But spreading money across different ownership categories can insure a person for more than $250,000 at one bank. Recognized categories include single accounts, joint accounts, certain retirement accounts (such as IRAs), and trust accounts. For example, a single account and an IRA at the same bank are each insured up to $250,000 because they are different categories. Under the rule effective April 1, 2024, trust deposits are insured $250,000 per eligible beneficiary, up to a maximum of $1,250,000 (for five or more beneficiaries) at one bank (Source: FDIC — Understanding Deposit Insurance).
Automatic and government-backed
Coverage is automatic: the FDIC states that "FDIC insurance coverage is automatic when you open a deposit account at an FDIC-insured bank" — the moment you open a deposit account at an insured bank, coverage applies; no separate application is required and the depositor does not pay for it (banks pay the premiums). Deposit insurance is backed by the full faith and credit of the United States government (Source: FDIC — Deposit Insurance At A Glance; FDIC — Understanding Deposit Insurance).
How to check if a bank is FDIC-insured
There are several ways to confirm a bank is insured: use the BankFind search tool on fdic.gov, or call 1-877-ASK-FDIC; insured banks display the official FDIC sign at their locations. The EDIE (Electronic Deposit Insurance Estimator) tool calculates how much of your money is insured (Source: FDIC — Deposit Insurance At A Glance; FDIC — Understanding Deposit Insurance).
Credit unions: NCUA insurance
Deposits at credit unions are protected not by the FDIC but by the National Credit Union Share Insurance Fund (NCUSIF), administered by the National Credit Union Administration (NCUA). Created by Congress in 1970, it insures deposits up to the same $250,000 limit and is also backed by the full faith and credit of the United States (Source: NCUA — Share Insurance Coverage).
History: has any depositor ever lost insured funds
According to the FDIC, no: "Since FDIC insurance began in 1934, no depositor has lost a single penny of insured funds due to bank failure" (FDIC, About the FDIC). The NCUA reports the same for credit unions. This article is general information; for your specific situation, check with your own bank or with the FDIC/NCUA (Source: FDIC — About the FDIC; NCUA — Share Insurance Coverage).
