What Is FDIC Insurance? The $250,000 Limit and Categories

FDIC insurance coverage limits are set at $250,000 per depositor, per insured bank, for each ownership category. That base figure has been the standard since the limit was last raised, and it applies automatically the moment you open a deposit account at an FDIC-insured bank. You don’t apply, and you don’t pay a premium.¹ The interesting part, and where most people either underestimate or overestimate their protection, is how those three “per” dimensions interact.

How the $250,000 Limit Actually Works

Each part of the formula does specific work.²

Per depositor means the FDIC looks at who owns the money, not how many accounts you have. A checking account with $150,000 and a savings account with $150,000 at the same bank add up to $300,000 in deposits, but only $250,000 in coverage. The other $50,000 is uninsured.³

Per insured bank means the limit resets at every separate institution. $250,000 at Bank A and $250,000 at Bank B are both fully covered.⁴

Per ownership category is where most of the extra coverage comes from. Accounts you own alone, accounts you own jointly, IRA deposits, and trust accounts each get their own $250,000 limit at the same bank. One person, one bank, several categories — coverage stacks.

Coverage includes both your principal and any interest accrued through the date the bank closes.⁴ Once the bank is placed into receivership, interest stops accruing. An acquiring bank sets its own new rates; if there is no acquirer and the FDIC pays you directly, no additional interest is paid beyond the failure date.⁵

What Counts as a Covered Deposit

FDIC insurance applies to deposit products at insured banks:⁶

Checking accounts
Savings accounts
Money market deposit accounts (MMDAs)
Certificates of deposit (CDs)
NOW accounts
Prepaid cards, if certain FDIC requirements are met
Official items such as cashier’s checks issued by the bank

What ties these together is that they are all money the bank owes back to you. Products with investment risk are not covered, even when you buy them through a bank branch: stocks, bonds, mutual funds, ETFs, annuities, and life insurance policies are all outside the FDIC.⁷

Two products cause repeated confusion. A money market deposit account at a bank is insured. A money market mutual fund — often sold by the same bank’s brokerage arm — is not. And cryptocurrency is never insured, even when the crypto company partners with an insured bank.⁸ Safe deposit box contents are also uninsured; the box sits inside the vault, but what you keep in it is not a deposit account.

One more trap worth checking: sweep features. Some accounts automatically move idle cash into money market mutual funds or repurchase agreements overnight. When that happens, the swept funds may stop being insured deposits. Banks that use these arrangements have to disclose in writing whether swept balances remain deposits or become uninsured investments.⁹ Read the disclosure if your account has one.

Ownership Categories That Stack Your Coverage

Each of the categories below is insured independently at the same bank.²

Single Accounts

Deposits owned by one person, with no named beneficiaries, are all combined and insured up to $250,000 total.⁶

Joint Accounts

A joint account is owned by two or more people who each have equal withdrawal rights. Each co-owner’s share of all joint accounts at the same bank is insured up to $250,000.¹⁰ A married couple’s joint account can carry up to $500,000 in coverage — $250,000 for each spouse — separate from anything they hold individually.

Adding beneficiaries to a joint account (such as a payable-on-death designation) reclassifies it as a trust account, with different rules.¹⁰

Trust Accounts

Formal revocable trusts and informal trust accounts (POD, ITF) are insured based on the number of eligible beneficiaries: $250,000 per owner, per beneficiary, capped at $1,250,000 per owner.¹¹ Three beneficiaries can support up to $750,000 of coverage on one account. Five or more push you to the $1,250,000 ceiling. How you divide the money among beneficiaries doesn’t affect the calculation; only the count matters.

As of April 1, 2024, irrevocable trust deposits are calculated the same way as revocable trust deposits.¹¹ That replaced a more complex older framework involving contingencies and retained interests.

Retirement Accounts

IRAs held at a bank (traditional, Roth, SEP, SIMPLE) are combined and insured up to $250,000 as their own category. Unlike trust accounts, IRA beneficiaries do not increase coverage. Employer plans like 401(k)s and 403(b)s fall under separate employee benefit plan rules.¹²

Business Accounts

Deposits owned by a corporation, partnership, LLC, or unincorporated association get their own $250,000 limit at each bank, separate from the owners’ personal accounts. The entity has to be engaged in a legitimate independent activity, not set up just to expand insurance. Sole proprietorships and DBAs are the exception; their business funds are treated as personal single accounts.¹³

How It Adds Up

A married couple at a single bank could hold: an individual account each ($250,000 x 2), one joint account ($500,000), a POD account each naming their two children ($500,000 x 2), and one IRA ($250,000). That is up to $2,250,000 in coverage at one institution, using ordinary account types.

Getting Coverage Above $250,000

If your deposits still exceed what ownership categories can protect, there are a few practical paths.

The simplest is spreading money across multiple FDIC-insured banks. Each institution carries its own set of category limits.⁴

If juggling accounts at several banks is a hassle, deposit allocation services do it for you. Networks like IntraFi’s ICS and CDARS take a large deposit, break it into pieces below $250,000, and place those pieces at multiple network banks. You work with one bank while the money receives FDIC coverage across many. These programs are structured to meet pass-through requirements, but confirm the details with your bank before assuming coverage.

Before opening a new account, run your numbers through the FDIC’s Electronic Deposit Insurance Estimator (EDIE), a free tool that calculates coverage based on your specific account structure.² It takes a few minutes and shows exactly where any uninsured balance sits.

Fintech Apps and Pass-Through Insurance

This is where assumptions about coverage go wrong most often. Many fintech apps and neobanks advertise deposits as “FDIC insured,” but the fintech itself is not a bank. It holds your money in a pooled account at a partner bank under what’s called pass-through insurance. Your share of that pool is only protected if three conditions are all met:¹⁴

You, not the fintech, are the actual owner of the funds.
The bank’s records show the account is held on behalf of customers (for example, “XYZ Company FBO Customers”).
Someone — the bank, the fintech, or another third party — maintains records identifying each customer and their ownership share.

Miss any of these, and the entire pooled account is insured only up to $250,000 total, shared among every customer in it.¹⁴

When the fintech middleware company Synapse collapsed in 2024, more than 100,000 customers lost access to over $265 million. The recordkeeping linking individual customers to funds at partner banks broke down, and many people went months without access to their money. The FDIC later proposed new rules requiring banks to keep better records for these custodial accounts. If you use a fintech app, verify which FDIC-insured bank actually holds your deposits and confirm the arrangement meets pass-through requirements.

Checking That a Bank Is Insured

Every FDIC-insured bank has to display the official FDIC sign at customer deposit locations, including teller windows and ATM screens.¹⁵ Online banks display the digital version on their homepage, login page, and account-opening page. For a definitive answer, use the FDIC’s BankFind tool at fdic.gov, or call the FDIC at 1-877-275-3342.¹⁶

What Happens If the Bank Fails

The FDIC is appointed as receiver and typically gets insured depositors their money within a few business days.³ Usually the accounts are transferred to another healthy bank so deposits continue seamlessly, or the FDIC mails you a check. You don’t file a claim. The FDIC identifies covered accounts from the failed bank’s records, and large banks are required to maintain systems that can calculate every depositor’s coverage within 24 hours of failure.¹⁷

Anything above the insurance limit is a different story. The FDIC issues a receivership certificate for the uninsured portion, which is your claim against whatever the failed bank’s remaining assets can generate through liquidation.3 Uninsured depositors share recoveries pro-rata with the FDIC itself and rank ahead of general creditors and shareholders in the payment priority.¹⁸ That priority is a real advantage, but recovery isn’t guaranteed, and the process can take months or years.

If Your Money Is at a Credit Union

FDIC insurance does not cover credit union deposits. The National Credit Union Administration (NCUA) does, through its Share Insurance Fund, and the terms mirror the FDIC’s: $250,000 per member, per insured credit union, per ownership category.¹⁹ Share drafts, share savings, and share certificates are covered the same way their bank equivalents are. Both programs are backed by the full faith and credit of the U.S. government; the difference is only which type of institution holds the account.

1
FDIC.gov. What We Do
2
Federal Deposit Insurance Corporation. Understanding Deposit Insurance
3
FDIC.gov. Deposit Insurance FAQs
4
FDIC.gov. Deposit Insurance At A Glance
5
FDIC.gov. Payment to Depositors
6
FDIC. Are My Deposit Accounts Insured by the FDIC?
7
eCFR. 12 CFR Part 330 – Deposit Insurance Coverage
8
FDIC.gov. Advisory to FDIC-Insured Institutions Regarding Deposit Insurance and Dealings with Crypto Companies
9
FDIC.gov. Sweep Account Disclosure Requirements Frequently Asked Questions
10
FDIC.gov. Financial Institution Employees Guide to Deposit Insurance – Joint Accounts
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FDIC.gov. Trust Accounts
12
FDIC.gov. Certain Retirement Accounts
13
FDIC.gov. Corporation, Partnership and Unincorporated Association Accounts
14
FDIC.gov. Pass-through Deposit Insurance Coverage
15
eCFR. 12 CFR Part 328
16
FDIC.gov. Enhanced FDIC Tool Helps Consumers Identify Unfamiliar Banks and Websites
17
eCFR. 12 CFR Part 370 – Recordkeeping for Timely Deposit Insurance Determination
18
FDIC. Insured Depository Institution Resolutions Handbook
19
National Credit Union Administration. Share Insurance Coverage