What bank accounts are FDIC-insured?

Bank failures are rare, but they can happen when a bank no longer has enough money to meet its financial obligations. If customers lose confidence in the bank, many may rush to withdraw their money at the same time. This is known as a bank run. Bank runs can accelerate a bank’s failure, and ultimately the Federal Deposit Insurance Corporation (FDIC) will take control of the bank. 

But depositors can rest easy if their bank is FDIC-insured. FDIC insurance is a program managed by an independent agency of the U.S. government designed to protect customers in the event of bank failure. The standard FDIC insurance amount is $250,000 per depositor, per insured bank, per account ownership category. That maximum amount of $250,000 applies for each bank you have a qualified account with as long as they are an FDIC member. (Capital One, N.A., is an FDIC member.)

So, what bank accounts are FDIC-insured? If you’re opening a bank account, it’s important to understand what FDIC insurance is and what it covers. 

The Banking Act of 1933 was passed in response to the bank failures of the Great Depression. In addition to other reforms, the act created the Federal Deposit Insurance Corporation. In 1935, the government made the FDIC permanent and tightened its standards.

Banks must be able to prove that they meet certain eligibility requirements to qualify for FDIC insurance, which is funded by payments from covered banks. In the rare event of a bank failure, those funds are used to pay back the insured accounts of customers at that bank. However, there are certain limits and restrictions.

Today, FDIC deposit insurance covers up to $250,000 per depositor, per insured bank, for each account ownership category. Coverage wasn’t always that high though.

When the FDIC was established, accounts were only insured up to $2,500. The covered amount was gradually raised to keep pace with inflation. According to the FDIC, the most recent coverage increase occurred in response to the 2008 financial crisis, when the covered amount went from $100,000 to the current $250,000.

You can increase your FDIC coverage by opening multiple account ownership categories at the same bank. Say that you open a business account and a personal checking account at the same bank. Each would be covered up to the maximum per law.

Meanwhile, a joint bank account will also be insured separately from a single-ownership account and for each owner of the account. That means if you open an individual checking account and a joint checking account with your partner, those two accounts would qualify for $750,000 of total insurance.

Keep in mind that this applies to different ownership categories but not to all different types of accounts. That means an individual savings account and an individual checking account owned by the same person at the same bank are combined for FDIC coverage purposes. Together, those accounts are insured for up to $250,000.

Checking accounts at FDIC-insured institutions are among the deposit products covered by FDIC deposit insurance. For your checking account to be eligible, there’s nothing you need to do. The funds you deposit into a checking account at an FDIC-insured bank are automatically protected up to the maximum per law.

Online savings accounts are also covered up to the maximum per law. For all FDIC-covered accounts, both the original deposit amount and the accrued interest within the limit will be protected. 

When opening an online account, it’s especially important to double-check that the type of account you’re opening is FDIC-insured. For example, crypto savings accounts are not protected by FDIC insurance, even if offered by an institution that is otherwise FDIC-eligible. 

Legitimate financial institutions should make clear which accounts are FDIC-insured on their websites. To be certain, always contact the financial institution directly.

High interest rate savings accounts at FDIC-insured institutions are also protected up to the maximum per law. If the interest on a savings account causes it to grow beyond $250,000, only the funds up to the limit will be guaranteed protection.

You can use different ownership categories or multiple banks if you want FDIC coverage for more than $250,000 in savings. This can help you increase your coverage while keeping your money protected.

Funds deposited into money market accounts offered by FDIC-insured institutions are protected up to the maximum per law, just like FDIC-insured savings accounts. 

Money market mutual funds, however, are not protected by the FDIC. That’s because  money market accounts are a type of savings account, while money market mutual funds are a type of investment account. Investments are generally not eligible for FDIC protection.

Certificates of deposit at insured institutions are covered by the FDIC up to the maximum per law. A CD can offer better rates than a high interest rate savings account, but CDs work a little differently than savings accounts. With a CD, your money earns interest at a fixed, guaranteed rate. If you withdraw it before the end of the term, you may have to pay an early withdrawal penalty.

IRAs, or individual retirement accounts, are also covered up to the maximum per law at FDIC-insured institutions. The plan participants have the right to direct how the money is invested. This could include an IRA saving account that you choose to open on your own. 

IRAs can also include CDs and money market accounts. IRA CDs, money market accounts and similar financial products are eligible for coverage. 

While stock and bond investments are a common feature of many retirement plans, they are not eligible for FDIC coverage. That means it’s possible that only a portion of your IRA will be covered.

If you’re uncertain if a retirement account or asset is covered, check with the institution providing it.

It’s possible to increase your coverage by creating a revocable trust account with multiple beneficiaries. 

Trust accounts allow account holders to designate beneficiaries who are eligible to receive trust assets. FDIC coverage applies to each beneficiary for up to five beneficiaries. In other words, a trust account with one owner and five beneficiaries could be covered up to $1,250,000. 

If the trust is jointly held between two owners, the FDIC will provide up to $250,000 in coverage per beneficiary per account holder. That means if you want to maximize your coverage to the limit, it would be possible to create a jointly held trust with five beneficiaries insured up to $2,500,000 in total.

Because these accounts can hold hundreds of thousands or even millions of dollars, it’s a good idea to speak with a financial professional before deciding where to keep your money. They can help you understand your options and choose the approach that best fits your financial situation.

FDIC insurance limits have been set at $250,000 since 2008. But it’s always possible that the insurance limit could be increased in the future, according to Bankrate. 

Whether that happens will likely depend on the future economic and political situation. If the past is any indication, Congress will likely need to raise the limit at some point to account for inflation and other factors. But it’s unclear when that might happen, and savers shouldn’t assume it will be any time soon.  

Have any questions about FDIC insurance limits? You can contact the FDIC or use their coverage calculator to determine how much of your funds are insured.

FDIC insurance helps protect your money if an FDIC-insured bank fails, giving you added peace of mind when you keep your savings in covered accounts. Understanding what is and isn’t protected can help you make informed decisions about where to keep your money.

• Most deposit accounts are FDIC-insured up to the applicable limits. These include checking accounts, savings accounts, money market accounts, CDs and certain IRAs.
• FDIC insurance generally covers up to $250,000 per depositor, per insured bank, per account ownership category. You may be able to increase your coverage by using different ownership categories or multiple banks. 
• Investment products (for example, stocks, bonds, mutual funds and most crypto assets) aren’t protected by FDIC insurance. This is the case even if you purchase them through an FDIC-insured bank.

Choosing an FDIC-insured account can help protect your savings and give you confidence in where you keep your money. Once you’ve decided what type of account fits your needs, you can choose from options like Capital One’s 360 Checking, 360 Performance Savings or 360 CD.