Your money in a checking account is protected up to $250,000 per depositor per bank through FDIC insurance, but only if the bank itself fails

The Federal Deposit Insurance Corporation (FDIC) guarantees that if your bank closes or collapses, you will not lose money up to $250,000 in that account. This protection is automatic — you do not need to sign up or pay a fee. It covers checking accounts, savings accounts, money market accounts, and certificates of deposit at any FDIC-insured bank.

FDIC insurance does not protect you from theft, fraud, or your own mistakes. If someone steals your debit card and drains your account, or if you send money to a scammer, the FDIC will not restore it. Your bank may help you recover funds in some cases, but that depends on the bank's fraud policy and how quickly you report the problem — not on FDIC coverage.

If you have more than $250,000 at a single bank, the amount above that limit is not insured. You can protect additional money by opening accounts at different FDIC-insured banks, because the $250,000 limit applies per bank, not per account.

Key Takeaways

  • FDIC insurance protects your money only if the bank fails, not if your account is hacked, your card is stolen, or you send money to a scammer.
  • The $250,000 FDIC limit applies to each depositor at each bank, so you can protect more money by spreading it across multiple banks.
  • You must report unauthorized transactions within 60 days to have the best chance of a refund from your bank, though the bank is not required to restore funds.
  • Debit card fraud and wire transfer fraud are handled differently — debit card disputes often favor the customer, while wire transfers are harder to reverse.
  • Banks are required to notify you of suspicious activity, but you are responsible for monitoring your account and reporting problems quickly.

What FDIC insurance actually covers and what it does not

FDIC insurance covers the bank failing, not the account being compromised. If your bank runs out of money and shuts down, the FDIC steps in and pays depositors up to $250,000 each. This has happened fewer than 20 times since 2008, and when it does, most depositors get their money within days because the FDIC moves quickly.

FDIC insurance does not cover theft, fraud, hacking, or sending money to the wrong person. If a thief uses your debit card, if someone breaks into your online account, or if you wire money to a scammer thinking it is a legitimate business, the FDIC will not restore it. Your bank may help you through its own fraud policies, but that is separate from FDIC protection.

The $250,000 limit is per depositor per bank. If you have $300,000 at Bank A, only $250,000 is insured. If you move $100,000 to Bank B, that $100,000 is fully insured at Bank B, and the remaining $50,000 at Bank A is still uninsured. Joint accounts are treated separately — if you and your spouse each own half of a joint account, you each have a separate $250,000 limit.

How to protect yourself from theft and fraud

Use a strong, unique password for your online banking account — one you do not use anywhere else. Enable two-factor authentication if your bank offers it, which means you need both your password and a code sent to your phone to log in. Change your password every few months and never share it with anyone, including bank employees.

Monitor your account regularly, at least weekly. Check your debit card transactions, pending transfers, and any alerts your bank sends. If you see something you did not authorize, contact your bank immediately — the sooner you report it, the better your chances of recovery. Most banks give you 60 days to report fraud, but reporting within 24 hours is much stronger.

Be cautious with wire transfers and ACH transfers, because they are harder to reverse than debit card charges. If you send money to a scammer by wire, your bank may not be able to get it back. Before you wire money or set up an automatic transfer, verify the recipient's information through a phone number you know is legitimate — not a number in an email or text message.

Do not use public Wi-Fi to access your bank account. Use your home network or your phone's cellular data instead. Public Wi-Fi makes it easier for someone to intercept your login information.

What happens if your debit card is stolen or used fraudulently

Call your bank immediately if your debit card is lost or stolen, or if you see unauthorized charges. Your bank will cancel the card and send you a new one, usually within 5 to 10 business days. In the meantime, you can still access your money through online banking or by visiting a branch.

For debit card fraud, federal law limits your liability. If you report the theft before any fraudulent charges are made, you are not responsible for anything. If fraudulent charges appear before you report it, your liability depends on how quickly you report: if you report within two business days, you are liable for no more than $50; if you report after two business days but within 60 days, you are liable for no more than $500; if you wait more than 60 days, you could lose everything.

Most banks are more generous than the law requires and will restore your money even if you report late, but they are not required to. Some banks restore all fraudulent charges automatically. Others investigate first. Ask your bank what its fraud policy is so you know what to expect.

How to recover money sent to a scammer

If you sent money to a scammer by wire transfer or ACH transfer, contact your bank immediately. Wire transfers are nearly impossible to reverse once they leave your bank, but your bank can try to recall the transfer if it has not been picked up yet. ACH transfers sometimes can be reversed within one or two business days.

Report the fraud to the Federal Trade Commission at ReportFraud.ftc.gov. This does not recover your money, but it creates a record that may help law enforcement investigate. If the scammer used a bank account to receive the money, the FTC can sometimes contact that bank and ask it to freeze the account.

Contact the receiving bank if you know which one it is. Tell them the account received stolen money and ask them to freeze it. Some banks will hold the money while they investigate, which may give law enforcement time to act.

Be aware that recovery is unlikely. Most wire fraud victims do not get their money back. The best protection is not to send money to someone you have not verified through a phone call to a number you know is real.

How to check if your bank is FDIC-insured

Go to the FDIC's Bank Find tool at BankFind.fdic.gov. Type in your bank's name and your state. If your bank appears in the results with an FDIC certificate number, it is insured. If it does not appear, your money is not covered by FDIC insurance.

Most banks are FDIC-insured, including all major national banks and most regional and local banks. Credit unions are not FDIC-insured — they are insured by the National Credit Union Administration (NCUA), which offers the same $250,000 per member per credit union limit. Online banks are FDIC-insured if they are chartered as banks, which most are.

If you bank at an institution that is not FDIC or NCUA-insured, your money has no federal protection if the institution fails. This is rare but possible with some very small banks or non-bank financial services companies.

What to do if your bank fails

If your bank fails, the FDIC takes over and pays out insured deposits. You will receive a notice in the mail telling you how much is insured and how to claim it. The FDIC usually pays within a few days, though it can take longer if there are complications.

You do not need to do anything except wait. The FDIC handles everything. Your debit card will stop working, but you can withdraw cash at the branch or wait for your insured funds to be transferred to a new bank or sent to you by check.

If your account balance exceeds $250,000, the amount above the limit is not automatically restored. You become a creditor of the failed bank and may recover some or all of the uninsured amount, but this can take months or years and is not may provide.

Frequently Asked Questions

If someone hacks my checking account and transfers money out, will FDIC insurance cover it?

No. FDIC insurance only covers bank failure, not fraud or theft. Your bank may restore the money through its fraud policy, but you must report it within 60 days and preferably within 24 hours. Report it to your bank and to the Federal Trade Commission at ReportFraud.ftc.gov.

Is my money safer in a savings account or a checking account?

Both are equally protected by FDIC insurance up to $250,000 per bank. The difference is not safety but access — checking accounts are meant for frequent withdrawals, while savings accounts have limits on how often you can withdraw. For fraud protection, checking accounts with debit cards have stronger federal protections than savings accounts.

What if I have more than $250,000 and want to protect all of it?

Open accounts at different FDIC-insured banks. You can have $250,000 at Bank A, $250,000 at Bank B, and so on, and each amount is fully insured. The FDIC limit is per depositor per bank, not per account, so you need separate banks to protect money above $250,000.

Can my bank freeze my account without telling me?

Yes, if the bank suspects fraud or illegal activity. Your bank is required to notify you as soon as reasonably possible, but it can freeze the account first. If your account is frozen, contact your bank immediately to find out why and what you need to do to unfreeze it.

Do I need to pay for FDIC insurance?

No. FDIC insurance is automatic and free at any FDIC-insured bank. You do not need to sign up or pay a fee. The bank pays for FDIC insurance through fees to the FDIC, not through charges to you.