Online savings accounts are FDIC insured if the bank holding your money is FDIC insured

Whether your online savings account is covered depends entirely on whether the bank itself is FDIC insured, not on whether the account sits online or in a physical branch. Most online banks are FDIC insured — but not all. The FDIC (Federal Deposit Insurance Corporation) insures deposits up to $250,000 per depositor, per bank, per account category. That means if you have $250,000 or less in a savings account at an FDIC-insured online bank, your money is protected if the bank fails.

The catch: some online banks are not FDIC insured. A few operate as credit unions (which use NCUA insurance instead) or as non-bank financial companies. Before you open an account, you need to confirm the bank itself carries FDIC insurance. The FDIC publishes a searchable list of all insured institutions on its website — you can look up any bank by name in seconds.

Key Takeaways

  • FDIC insurance protects deposits up to $250,000 per person per bank, regardless of whether the account is online or at a physical branch.
  • You must verify the bank itself is FDIC insured by searching the FDIC's official institution list — online status alone does not may provide coverage.
  • If you have more than $250,000 at one bank, you can protect additional funds by opening accounts in different ownership categories (joint account, retirement account, trust account).
  • Credit unions use NCUA insurance instead of FDIC insurance, with the same $250,000 per-account limit.

How to check if an online bank is FDIC insured

Go to the FDIC's Bank Find tool at banks.data.fdic.gov. Type in the bank's name and search. If the bank appears in the results, it is FDIC insured. If it does not appear, it is not covered by the FDIC.

You can also call the bank directly and ask whether it is FDIC insured. Most legitimate online banks will tell you immediately and may even provide their FDIC certificate number. If a bank hesitates or cannot answer, that is a red flag.

Some online banks are subsidiaries of larger banks. For example, Marcus by Goldman Sachs is an online savings brand owned by Goldman Sachs Bank USA, which is FDIC insured. The FDIC insures deposits at the parent bank, not the brand name. When you search the FDIC database, search for the actual bank name (Goldman Sachs Bank USA), not the brand (Marcus).

The $250,000 limit and how it works

The FDIC covers up to $250,000 per depositor, per bank, per account category. That means if you have $300,000 in a savings account at one FDIC-insured bank, only $250,000 is protected. The extra $50,000 is not covered.

But the limit resets for each account category at the same bank. The main categories are: single accounts (in your name alone), joint accounts (shared ownership), retirement accounts (IRAs and similar), and trust accounts. If you have $250,000 in a single savings account and another $250,000 in a joint savings account at the same bank, both are fully covered because they are different categories.

If you want to protect more than $250,000 at one bank, you can split it across these categories. If you want to protect more than $250,000 total, you need to use multiple FDIC-insured banks. For example, $250,000 at Bank A and $250,000 at Bank B are both fully covered.

Online banks versus brick-and-mortar banks: the insurance difference

There is no difference in FDIC coverage between an online bank and a traditional bank with physical branches. Both are covered the same way, up to $250,000 per account category. The only thing that matters is whether the bank itself is FDIC insured.

Online banks often offer higher interest rates on savings accounts than brick-and-mortar banks because they have lower overhead costs. That higher rate does not change the insurance coverage — it is the same $250,000 limit. Some people worry that online banks are riskier because there is no physical location to visit, but the FDIC insurance protection is identical.

What happens if an FDIC-insured online bank fails

If an FDIC-insured bank fails, the FDIC steps in and pays depositors up to $250,000 per account category. You do not have to do anything — the FDIC handles the payout automatically. In most cases, you receive your money within a few business days, though the FDIC has up to 10 business days to complete the process.

The FDIC does not transfer your account to another bank automatically. Instead, it pays you directly. You will need to open a new account elsewhere if you want to keep your money in a savings account. The FDIC will contact you with instructions on how to claim your insured funds.

Non-FDIC online banks and where your money actually sits

Some online financial companies are not banks at all — they are fintech platforms or money transfer services. These companies often partner with FDIC-insured banks to hold customer deposits, but the partnership does not automatically mean your money is insured under your name.

For example, some investment apps and payment platforms hold customer cash at partner banks. If the partner bank is FDIC insured and the platform has set up the accounts correctly, your deposits may be covered. But if the platform goes out of business or mishandles the account setup, you could lose money even though an FDIC-insured bank holds it.

Before you deposit money with any online financial company, ask directly: "Is my deposit held at an FDIC-insured bank? Under what name is the account registered?" If the company cannot answer clearly, or if the account is registered under the company's name rather than yours, your coverage may be limited or nonexistent.

Credit unions and NCUA insurance instead of FDIC

Some online financial institutions are credit unions, not banks. Credit unions use NCUA insurance (National Credit Union Administration) instead of FDIC insurance. The coverage limit is the same — $250,000 per member, per credit union, per account category — but the insurer is different.

To check if a credit union is NCUA insured, search the NCUA's institution directory at mapping.ncua.gov. The process is the same as checking FDIC status: search by name, and if it appears, it is insured. If you have accounts at both an FDIC-insured bank and an NCUA-insured credit union, each is covered separately up to $250,000.

Frequently Asked Questions

If I have $500,000 in an online savings account at an FDIC-insured bank, how much is protected?

Only $250,000 is covered by FDIC insurance. The remaining $250,000 is not protected. To protect the full amount, you would need to split it across two FDIC-insured banks, or use different account categories (like a joint account and a single account) at the same bank, if that option is available to you.

Do I need to do anything to activate FDIC insurance on my online savings account?

No. If your online bank is FDIC insured, your deposits are automatically covered up to $250,000 per account category. You do not need to register, pay a fee, or take any action. Coverage is automatic.

What if my online bank is not FDIC insured — can I get my money back?

If the bank fails and is not FDIC insured, you have no federal protection. You would need to file a claim as a creditor in bankruptcy court, which usually means losing most or all of your money. This is why checking FDIC status before opening an account matters.

Are online savings accounts safer than checking accounts for FDIC insurance?

No. Both savings and checking accounts at FDIC-insured banks are covered equally, up to $250,000 per account category. The type of account does not change the insurance protection — only the bank's FDIC status matters.

If I have accounts at multiple online banks, is each one insured separately?

Yes. Each FDIC-insured bank provides separate coverage up to $250,000 per account category. If you have $250,000 at Bank A and $250,000 at Bank B, both amounts are fully protected because they are at different banks.