Understanding FDIC insurance limits

What all consumers should know

In light of our ongoing commitment to bring you timely content, below is important information about your FDIC coverage that you should know and understand.

FDIC overview

The Federal Deposit Insurance Corporation (FDIC) protects the depositors of insured banks against the loss of their deposits up to certain limits if a bank fails. Although not one penny of insured deposits has ever been lost by a customer of a federally insured bank1, we want to make sure you understand the FDIC rules.

Basic insurance coverage:

The basic limit on FDIC insurance coverage for most deposit accounts is now $250,000 per depositor, per insured institution. IRAs and certain other retirement accounts are still insured up to $250,000 per owner.

Misunderstanding

Many customers believe that FDIC insurance only covers their deposits at an insured institution for up to the basic insurance limit of $250,000. What they don't always realize is that the FDIC provides separate insurance coverage for deposit accounts held in different categories of ownership. Some examples:

  • The funds you have in deposit accounts in your name alone are insured up to $250,000.
  • Your share of accounts held jointly with other people is also separately insured up to $250,000 if the account meets the requirements to be classified as a "joint account.”
  • Business accounts qualify for separate insurance coverage up to $250,000 if not a sole proprietorship.
  • Trust accounts may qualify for separate insurance of $250,000 per beneficiary (not per depositor) if certain conditions are met. That means you could have a $750,000 trust account naming your spouse and two children as beneficiaries upon your death and all $750,000 would be insured by the FDIC ($250,000 for each beneficiary), separately from the money you have in accounts in other ownership categories at the same institution.

As you can see, if you own different accounts in different ownership categories, you may qualify for more than $250,000 in coverage at one insured bank. Talk with us if you'd like to learn more about how your accounts are covered.

Make the most of your FDIC coverage

Here are some examples to help you understand how titling your accounts can provide you added FDIC protection.

Example #1: Joint account

Mary's ownership share in all joint accounts equals 1/2 of the interest checking account ($62,500), 1/2 of the savings account ($100,000) and 1/3 of the CD ($100,000), for a total of $262,500. Since her coverage in the joint ownership category is limited to $250,000, $12,500 is uninsured. John's ownership share in all joint accounts is the same as Mary's, so $12,500 is uninsured. Robert's ownership share in all joint accounts is 1/3 of the CD, or $100,000, so his share is fully insured.

Account Title Deposit Type Account Balance
Mary and John Smith Interest checking $ 125,000
John or Mary Smith Savings 200,000
Mary or John or Robert Smith CDs 300,000
Total Deposits   $ 625,000

Insurance coverage for each owner is calculated as follows:

Depositors Ownership Share Amount Amount Uninsured
Mary $ 125,000 $ 250,000 $ 12,500
John 262,500 250,000 12,500
Robert 100,000 100,000 0
Total $ 625,000 $ 600,000 $ 25,000

Example #2: Retirement account

Since Roberta's total deposits in all retirement accounts at the same insured bank are less than the $250,000 limit, both retirement accounts are fully insured.

Account Title Account Balance
Roberta's Roth IRA $ 110,000
Roberta's IRA 75,000
Total 185,000
Amount Insured $ 185,000

Example #3: POD accounts with multiple owners and beneficiaries

If the requirements for coverage in this category are met, these four accounts totaling $2.5 million are fully insured because each owner is entitled to $250,000 insurance coverage for each beneficiary. The husband has $1.5 million of insurance coverage ($250,000 for each beneficiary-his three children in the first account, his wife in the second account and his brother and father in the fourth account). The wife has $1 million of insurance coverage ($250,000 for each beneficiary-her three children in the first account and her husband in the third account). Note: The $250,000 per beneficiary limit applies to all formal and informal revocable trust accounts that an owner has at the same bank.

Account Title Account Balance Amount Insured Amount Uninsured
Husband and Wife
POD 3 Children
$ 1,500,000 $ 1,500,000 0
Husband POD Wife 250,000 250,000 0
Wife POD Husband 250,000 250,000 0
Husband POD
Brother and Father
500,000 250,000 0
Total $ 2,500,000 $ 2,500,000 $ 0


NOTE: FDIC insurance only applies to deposits, not investments. For example, mutual funds, stocks, bonds, life insurance policies and annuities- even if you purchased them at an FDIC institution- are not insured.

1 See "Your Insured Deposits” at www.fdic.gov/deposit/deposits/insured. Content accurate as of January 2013.