The FDIC has been around since 1933. In that time, no depositor has lost a single dollar of insured deposits. Not during the Great Depression, not during the savings and loan crisis, not during 2008, not during the 2023 bank failures. The insurance does what it says.
But it has limits, and most people don’t fully understand where the coverage starts, where it stops, and what falls through the gaps.
What’s covered
Checking accounts, savings accounts, money market deposit accounts, and certificates of deposit (CDs) at FDIC insured banks. The coverage is automatic. You don’t apply for it. If your money is in a deposit account at a member bank, it’s insured.
The limit is $250,000 per depositor, per bank, per ownership category. Ownership categories include single accounts, joint accounts, certain retirement accounts (IRAs), trust accounts, and business accounts. Each category gets its own $250,000 of coverage at each bank.
What’s not covered
Stock, bond, and mutual fund investments, even if purchased through the bank. Life insurance and annuity products. Safe deposit box contents. US Treasury bills, bonds, and notes (these are backed by the government separately). Cryptocurrency.
If a bank employee sold you an investment product and the bank fails, the investment isn’t insured by FDIC. It might be covered by SIPC if it was in a brokerage account, but the protection mechanisms are different.
How to check if your bank is covered
The FDIC’s BankFind tool at fdic.gov lets you search for any bank and verify its FDIC membership. All national banks and most state banks are members. If you’re at a credit union, check for NCUA insurance instead.
Online banks like Ally, Marcus, Discover, and Capital One are all FDIC insured. The lack of a physical branch doesn’t affect the insurance. The coverage is identical to a brick and mortar bank.
Fintech apps are where it gets complicated. Some neobanks (Chime, Varo, SoFi) partner with FDIC insured banks to hold deposits. Your money is technically at the partner bank, not the app company. If the app company goes under but the bank doesn’t, your deposits are fine. If the partner bank fails, FDIC covers you. The risk is in the space between: if the app company mishandles the funds before they reach the bank, you might have a problem.
The Synapse collapse in 2024 showed this risk. Synapse was a middleman between fintech apps and banks. When it failed, some customer funds were temporarily inaccessible. The FDIC insurance applied to the bank holding the deposits, but the mess between the app and the bank created weeks of uncertainty.
Maximizing your coverage
If you have more than $250,000 to protect, the easiest approach is multiple banks. $250,000 at three different banks gives you $750,000 in total coverage.
At a single bank, you can increase coverage through different ownership categories. A married couple with two individual accounts ($250,000 each) and one joint account ($500,000) has $1,000,000 in coverage at one bank.
CDARS and ICS are bank programs that spread large deposits across a network of banks while giving you the convenience of working with just one. You deposit $1 million at your bank, and they distribute it across four banks in $250,000 chunks. Each chunk is separately insured. You deal with one bank. The coverage multiplies.
The realistic risk assessment
If you have under $250,000 at an FDIC insured bank, your risk of losing money to a bank failure is effectively zero. The FDIC fund currently holds over $120 billion and has a borrowing line from the US Treasury. Even during 2008, when hundreds of banks failed, every insured depositor was paid in full.
The risk most people should actually worry about isn’t bank failure. It’s earning 0.01% interest at a traditional bank while a high-yield savings account would pay 4% to 5%. The difference in earnings over time is far more consequential than the near-zero probability of losing money to a bank collapse.
Keep your money insured. Move it somewhere it earns a reasonable return. That’s the extent of what most people need to do about bank safety.