FDIC Insurance Limits, Explained

A couple holding $780,000 at one bank, spread across a joint checking account, a joint savings account and two IRAs, is insured on every dollar of it. They did not open anything at a second institution and they did not fill in a form.

The rule people remember is "$250,000". The rule as written is $250,000 per depositor, per insured bank, per ownership category, and the third clause is the one that does all the work.

The three clauses, unpacked

Per depositor. Per person, not per account. Three individual accounts at the same bank holding $100,000 each are added together into one $300,000 balance, of which $250,000 is covered and $50,000 is not.

Per insured bank. Per institution, not per branch. And two brands can share one charter, in which case they share one limit. That is worth checking rather than assuming, because it catches people who deliberately split money between what they believe are two banks.

Per ownership category. The categories are counted separately, and this is the whole mechanism. Money you own alone, money you own jointly and money in certain retirement accounts each get their own $250,000.

The FDIC states the coverage as "at least $250,000 at each FDIC-insured bank" and sets the categories out in are my deposit accounts insured by the FDIC.

The ownership categories

Two of those need care. Trust coverage was simplified in recent years and the cap is now $1,250,000 per owner across all trust accounts at one bank, rather than unlimited. And the retirement category covers IRAs held as deposits, not an IRA invested in funds, which is not a deposit at all.

A couple with $780,000, worked

Same bank. Nothing unusual about the arrangement.

Note what happened in the joint rows. The two joint accounts hold $380,000 between them. That is added together and split by ownership, giving each partner a $190,000 share, and each share is insured to $250,000. So the joint category alone could carry up to $500,000 for this couple, and it is carrying $380,000.

Run the same couple's headroom:

Which is the useful version of the headline. "Only $250,000 is safe" sends people to open accounts at four banks, managing four sets of credentials and four rates, when the same coverage was available where they already were.

What is not covered

The categories describe deposits. These are not deposits and carry no FDIC coverage at all, including when bought through a bank branch:

• Stocks, bonds, mutual funds and ETFs
• Money market funds, as opposed to money market deposit accounts
• Annuities and life insurance products
• Municipal securities and Treasury securities bought through the bank, although Treasuries carry the government's own backing
• Crypto assets
• The contents of a safe deposit box

The money market distinction catches people regularly, and it is covered in high-yield savings against CDs and money market accounts. A money market deposit account is insured. A money market fund is an investment.

Credit unions and the NCUA

Credit unions are not FDIC members. They are insured by the National Credit Union Administration through the Share Insurance Fund, at the same $250,000 per member, per institution, per ownership category, and with the same backing by the full faith and credit of the United States.

Functionally it is the same protection under a different regulator. What differs is where you check membership, and the terminology: a credit union has members and shares rather than customers and deposits. The wider comparison is in credit union against bank.

Checking your own coverage

1. Confirm the institution is insured. Use the FDIC's BankFind, or the NCUA's equivalent for a credit union. Do not rely on a logo on a website, and be particularly careful with apps that partner with banks rather than being one.
2. List every account at that institution, with its ownership category. This is the step that takes ten minutes and produces the answer.
3. Add up each category separately and compare with its limit. Joint balances are split by the number of co-owners first.
4. Run it through EDIE, the FDIC's own calculator, if anything is close to a limit or involves a trust.
5. Redo it after any large change: a house sale, an inheritance, a rollover.

When this does not apply

If the money is only briefly over the limit. Deposit insurance covers what happens if the bank fails, which is rare and not predictable. A house sale sitting in an account for eleven days is a small exposure, and it is still worth splitting if it is a large sum and splitting is easy.

If your accounts are at a fintech app rather than a bank. Pass-through insurance depends on the money actually reaching an insured bank in an account titled correctly, and on the app's records being accurate. That is a different risk from a bank failing: is money in an online bank safe.

If you hold a trust account. The owners-by-beneficiaries formula is the one part of this that genuinely needs the calculator, and the $1,250,000 per-owner cap changed how large trust arrangements are covered. Do not estimate it.

If two brands share a charter. Some banks operate several consumer brands on one charter, and deposits across them share a single limit. Check the charter rather than the name before treating them as separate institutions.

If the balance is genuinely large and permanent. Above a couple of million, the question stops being about insurance categories and starts being about whether that much should be in cash at all.

Next steps

1. List every account at your main bank, with balance and ownership category, on one page.
2. Total each category and compare against its limit. Most people find they have more coverage than they thought.
3. Confirm the institution is insured through the FDIC's BankFind, or the NCUA for a credit union.
4. If anything is uninsured, move it into a different category before opening an account at a second bank. Adding a joint account or using a retirement deposit is usually simpler.
5. If a trust is involved, run the figures through EDIE rather than estimating.