Banks insure deposits through federal insurance, not the bank itself

Your money at a bank is insured by the Federal Deposit Insurance Corporation (FDIC), a government agency that protects deposits if the bank fails. The FDIC does not insure against theft, fraud, or market losses — only against the bank closing its doors. The standard coverage limit is $250,000 per depositor, per bank, per account category. If you have more than $250,000 at one bank, the amount over that limit is not protected.

Credit unions use a different insurer called the National Credit Union Administration (NCUA), which offers the same $250,000 limit per member, per credit union, per account category. Both agencies cover the same types of accounts the same way, so the protection works identically whether you bank at a traditional bank or a credit union.

Key Takeaways

  • The FDIC insures bank deposits up to $250,000 per person, per bank, per account type, and the NCUA provides the same coverage for credit unions.
  • Joint accounts, retirement accounts, and trust accounts are each insured separately, so you can have multiple $250,000 protections at the same bank by using different account categories.
  • Money market accounts, savings accounts, and checking accounts are all covered under the same $250,000 limit, so spreading money across account types at one bank does not increase your protection.
  • Accounts at different banks are insured separately, so you can deposit $250,000 at Bank A and another $250,000 at Bank B and both amounts are fully protected.

How the $250,000 limit breaks down by account type

The $250,000 limit applies to each account category separately. This means you can have $250,000 in a single account and another $250,000 in a joint account at the same bank, and both are fully insured. The main account categories are: single accounts (in your name alone), joint accounts (shared with another person), retirement accounts (IRAs, SEP-IRAs, and similar), trust accounts, and accounts held in the name of a deceased person's estate.

Within each category, the total is capped at $250,000. If you have a checking account and a savings account both in your name alone at the same bank, they share the same $250,000 limit — the FDIC adds them together. If you have $150,000 in checking and $150,000 in savings, only $250,000 total is insured, leaving $50,000 unprotected. To protect both amounts, you would need to move one account to a different bank.

Retirement accounts get their own $250,000 limit separate from your other accounts. A traditional IRA and a Roth IRA at the same bank are treated as one account category, so they share a single $250,000 limit combined. If you have both types, add them together to see whether you exceed the cap.

Joint accounts and how they are insured

A joint account is insured separately from your individual accounts. If you and another person own a joint account together, that account is insured up to $250,000 in the names of both owners combined. Each owner's share is not insured separately — the limit covers the account as a whole.

If you have a joint account with $250,000 and also have an individual account with $250,000 at the same bank, both are fully insured because they are different account categories. The joint account protection does not reduce the protection on your individual account, and vice versa. However, if you have two joint accounts at the same bank (one with Person A and one with Person B), they share the same $250,000 limit across both accounts combined.

What happens when you exceed the limit

If your deposits at one bank exceed $250,000 in a single account category, the FDIC insures only up to $250,000. The excess is unsecured, meaning if the bank fails, you lose that money. For example, if you have $300,000 in a checking account at Bank X, the FDIC covers $250,000 and you lose $50,000.

The FDIC does not refund the uninsured portion or compensate you for the loss. The only way to protect money beyond $250,000 is to split it across multiple banks or use different account categories. Many people with substantial savings use a strategy called FDIC laddering, where they open accounts at multiple banks to ensure each deposit stays within the $250,000 limit per institution.

Accounts at different banks are insured separately

Each bank is insured independently. If you have $250,000 at Bank A and $250,000 at Bank B, both amounts are fully insured because they are at different institutions. The FDIC tracks coverage by bank, not by how many banks you use. You can have unlimited FDIC protection by spreading your money across multiple banks, as long as no single bank holds more than $250,000 in any one account category.

This applies to online banks, regional banks, and large national banks equally. An online bank with FDIC insurance provides the same $250,000 protection as a brick-and-mortar bank. Before opening an account, check that the bank displays the FDIC logo or states it is FDIC-insured. Most banks are, but some are not, and uninsured banks offer no federal protection.

What the FDIC does and does not cover

The FDIC covers deposits — money you have placed in the bank. This includes checking accounts, savings accounts, money market accounts, and certificates of deposit (CDs). It does not cover stocks, bonds, mutual funds, or other investments held through the bank's brokerage service, even if you buy them through your bank account.

The FDIC also does not cover losses from fraud, theft, or unauthorized transfers. If someone steals your debit card and drains your account, the FDIC does not reimburse you — your bank's fraud protection does, and that is a separate process. The FDIC covers only the risk that the bank itself fails and closes. If the bank is solvent but your money is stolen, that is a bank security issue, not an FDIC issue.

How to check if your bank is FDIC-insured

The FDIC maintains a public database called the FDIC Bank Find tool, available at fdic.gov. You can search by bank name or location to confirm whether a bank is insured and see the exact coverage limits for your accounts. The tool also shows the bank's insurance certificate number and the date it joined the FDIC.

Most traditional banks and credit unions are insured, but some online banks, investment firms, and alternative financial institutions are not. If a bank is not FDIC-insured, your deposits have no federal protection if the institution fails. Before moving money to a new bank, especially an online-only bank, use the Bank Find tool to verify its status. The search takes less than a minute and can prevent a costly mistake.

Frequently Asked Questions

Does FDIC insurance cover my money if the bank is hacked?

No. The FDIC covers only losses from bank failure, not from theft or fraud. If hackers drain your account, your bank's fraud protection and your own security measures are your defense. Report unauthorized transactions to your bank immediately — most banks will reverse fraudulent charges, but that is separate from FDIC insurance.

If I have $500,000, how do I protect all of it?

Open accounts at two different banks, keeping $250,000 at each. You can also use different account categories at the same bank — for example, $250,000 in an individual account and $250,000 in a joint account — but splitting across banks is simpler. Some people use a service called a sweep account, which automatically moves money across multiple FDIC-insured banks to keep each account under $250,000.

Are savings accounts and checking accounts insured separately?

No. Both are in the same account category (single accounts in your name), so they share one $250,000 limit combined. If you have $150,000 in checking and $150,000 in savings at the same bank, only $250,000 total is insured. To protect both, move one account to a different bank.

What if my bank fails — how do I get my money back?

The FDIC steps in and either arranges for another bank to take over your account or pays you directly. In most cases, you regain access to your insured deposits within a few business days. The FDIC has a claims process, but most customers never need it because another bank assumes the deposits. Check the FDIC website for updates if your bank fails.

Does FDIC insurance cover money I owe the bank?

No. If you have a loan or credit card debt with the bank, the bank can offset your insured deposits against what you owe. The insurance protects your deposits from bank failure, not from the bank's right to collect debts you have incurred.