FDIC Insured or Not Insured?
A Guide to What Is and Is Not Protected by FDIC Insurance
So - you feel your cash is safe and protected when you walk through the door of the bank or saving association, much safer than when you kept it under your mattress. And you should. BUT, are your funds all covered by FDIC insurance just because you walked into a secure-looking building with iron bars and guards? Not necessarily - it depends on which of the bank's products you decide to use and whether the bank is FDIC insured.
What Is Insured?
You are probably familiar with the traditional types of bank accounts - checking, savings, and certificates of deposit (CDs) - that are insured by the FDIC. Banks also may offer what is called a money market deposit account, which earns interest at a rate set by the bank and usually limits the customer to a certain number of transactions within a stated time period.
All of these types of accounts generally are insured by the FDIC up to the legal limit of $250,000 and sometimes even more for special kinds of accounts or ownership categories. For more information on deposit insurance see FDIC brochure "Your Insured Deposits."
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What Is Not Insured?
Increasingly, institutions are also offering consumers a broad array of investment products that are not deposits, such as mutual funds, annuities, life insurance policies, stocks and bonds. Unlike the traditional checking or savings account, however, these non-deposit investment products are not insured by the FDIC.
Investors sometimes favor mutual funds over other investments, perhaps because they hold promise of a higher rate of return than say, CDs. And with a mutual fund, such as a stock fund, your risk - the risk of a company going bankrupt, resulting in the loss of investors' funds - is more spread out because you own a piece of a lot of companies instead of a portion of a single enterprise. A mutual fund manager may invest the fund's money in either a variety of industries or several companies in the same industry.
Or your funds may be invested in a money market mutual fund, which may invest in short-term CDs or securities such as Treasury bills and government or corporate bonds. Do not confuse a money market mutual fund with an FDIC-insured money market deposit account (described earlier), which earns interest in an amount determined by, and paid by, the financial institution where your funds are deposited.
You can - and should - obtain definitive information about any mutual fund before investing in it by reading a prospectus, which is available at the bank or brokerage where you plan to do business.
The key point to remember when you contemplate purchasing mutual funds, stocks, bonds or other investment products, whether at a bank or elsewhere, is: Funds so invested are NOT deposits, and therefore are NOT insured by the FDIC - or any other agency of the federal government.
Securities you own, including mutual funds, that are held for your account by a broker, or a bank's brokerage subsidiary are not insured against loss in value. The value of your investments can go up or down depending on the demand for them in the market. The Securities Investors Protection Corporation (SIPC), a non government entity, replaces missing stocks and other securities in customer accounts held by its members up to $500,000, including up to $250,000 in cash, if a member brokerage or bank brokerage subsidiary fails. For more information contact:
Securities Investor Protection Corporation 805 15th Street, NW Room 800 Washington, DC 20005-2215
Telephone: 202-371-8300 E-Mail: firstname.lastname@example.org www.SIPC.org
Treasury securities include Treasury bills (T-bills), notes and bonds. T-bills are commonly purchased through a financial institution.
Customers who purchase T-bills at banks that later fail become concerned because they think their actual Treasury securities were kept at the failed bank. In fact, in most cases banks purchase T-bills via book entry, meaning that there is an accounting entry maintained electronically on the records of the Treasury Department; no engraved certificates are issued. Treasury securities belong to the customer; the bank is merely acting as custodian.
Customers who hold Treasury securities purchased through a bank that later fails can request a document from the acquiring bank (or from the FDIC if there is no acquirer) showing proof of ownership and redeem the security at the nearest Federal Reserve Bank.
Or, customers can wait for the security to reach its maturity date and receive a check from the acquiring institution, which may automatically become the new custodian of the failed bank's T-bill customer list (or from the FDIC acting as receiver for the failed bank when there is no acquirer).
Even though Treasury securities are not covered by federal deposit insurance, payments of interest and principal (including redemption proceeds) on those securities that are deposited to an investor's deposit account at an insured depository institution ARE covered by FDIC insurance up to the $250,000 limit. And even though there is no federal insurance on Treasury securities, they are backed by the full faith and credit of the United States Government - the strongest guarantee you can get.
Safe Deposit Boxes
The contents of a safe deposit box are not insured by the FDIC. (Make sure you read the contract you signed with the bank when you rented the safe deposit box in the event that some type of insurance is provided; some banks may make a very limited payment if the box or contents are damaged or destroyed, depending on the circumstances.)
If you are concerned about the safety, or replacement, of items you have put in a safe deposit box, you may wish to consider purchasing fire and theft insurance. Separate insurance for these perils may be available; consult your insurance agent. Usually such insurance is part of a homeowner's or tenant's insurance policy for a residence and its contents. Again, consult your insurance agent for more information.
In the event of a bank failure, in most cases an acquiring institution would take over the failed bank's offices, including locations with safe deposit boxes. If no acquirer can be found the FDIC would send boxholders instructions for removing the contents of their boxes.
Robberies and Other Thefts
Stolen funds may be covered by what's called a banker's blanket bond, which is a multi-purpose insurance policy a bank purchases to protect itself from fire, flood, earthquake, robbery, defalcation, embezzlement and other causes of disappearing funds. In any event, an occurrence such as a fire or bank robbery may result in a loss to the bank but should not result in a loss to the bank's customers.
If a third party somehow gains access to your account and transacts business that you would not approve of, you must contact the bank and your local law enforcement authorities, who have jurisdiction over this type of wrongdoing.
Checking Accounts (including money market deposit accounts)
Savings Accounts (including passbook accounts)
Certificates of Deposit
Investments in mutual funds (stock, bond or money market mutual funds), whether purchased from a bank, brokerage or dealer
Annuities (underwritten by insurance companies, but sold at some banks)
Stocks, bonds, Treasury securities or other investment products, whether purchased through a bank or a broker/dealer
For More Information from the FDIC
Call toll-free at 1-877-ASK-FDIC (1-877-275-3342) from 8 a.m. until 8 p.m. Eastern Time, Monday through Friday.
For TDD call 1-800-925-4618.
Calculate your insurance coverage on-line using the FDIC’s Electronic Deposit Insurance Estimator at: www.fdic.gov/edie
Request a copy of “Your Insured Deposits,” which provides a detailed discussion on all the ownership categories, or by calling toll free 1-877-275-3342.
Read more about FDIC insurance on-line at: www.fdic.gov/deposit/deposits/index.html
Send your questions by e-mail using the FDIC’s on-line Customer Assistance Form at: www2.fdic.gov/starsmail
Mail your question to: FDIC Attn: Deposit Insurance Outreach
550 17th Street, N.W. Washington, DC 20429-9990
This web page is intended to present information in a non-technical way and is not intended to be a legal interpretation of FDIC regulations and policies.
Deposit Insurance Summary
FDIC Deposit Insurance Coverage
The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the United States government that protects the funds depositors place in banks and savings associations. FDIC insurance is backed by the full faith and credit of the United States government. Since the FDIC was established in 1933, no depositor has ever lost a single penny of FDIC-insured funds.
FDIC insurance covers all deposit accounts, including checking and savings accounts, money market deposit accounts and certificates of deposit. FDIC insurance does not cover other financial products and services that banks may offer, such as stocks, bonds, mutual fund shares, life insurance policies, annuities or securities.
The standard insurance amount is $250,000 per depositor, per insured bank, for each account ownership category.
The FDIC provides separate coverage for deposits held in different account ownership categories. Depositors may qualify for more coverage if they have funds in different ownership categories and all FDIC requirements are met. (For details on the requirements, go to www.fdic.gov/deposit/deposits
The following chart shows standard insurance amounts for FDIC account ownership categories. All deposits that an accountholder has in the same ownership category at the same bank are added together and insured up to the standard insurance amount.
FDIC Deposit Insurance Coverage Limits by account ownership category
Single Accounts owned by one person $ 250,000 per owner
Joint Accounts owned by two or more persons $ 250,000 per co-owner
Certain Retirement Accounts includes IRAs $ 250,000 per owner
Revocable Trust Accounts $ 250,000 per owner per beneficiary up to 5 beneficiaries (more coverage available with 6 or more beneficiaries subject to specific conditions and requirements)
Corporation, Partnership and Unincorporated Association Accounts $ 250,000 per corporation, partnership or unincorporated association
Irrevocable Trust Accounts $ 250,000 for the non-contingent, ascertainable interest of each beneficiary
Employee Benefit Plan Accounts $ 250,000 for the non-contingent, ascertainable interest of each plan participant
Government Accounts $ 250,000 per official custodian (more coverage available subject to specific conditions)
To calculate your deposit insurance coverage
Use the FDIC’s Electronic Deposit Insurance Estimator (EDIE) at www.fdic.gov/edie
For questions about FDIC coverage limits and requirements
Visit www.FDIC.gov/deposit/deposits call toll-free 1-877-ASK-FDIC, or ask a representative at your bank.
The more you know about FDIC deposit insurance coverage, the safer your money.
Depositors should understand their coverage limits and confirm that a financial institution is FDIC-insured.
The FDIC sign, displayed at every FDIC-insured institution, is a symbol of confidence for depositors.
FDIC Official Teller Sign
There is no need for depositors to apply for FDIC insurance or even to request it; coverage is automatic, up to the insurance limits described above, whenever a deposit account is opened at an FDIC-insured bank or savings association.
To learn more about the FDIC’s insurance coverage rules and requirements, refer to the resources listed below.
For More Information from the FDIC
Calculate insurance coverage
Use the FDIC’s online Electronic Deposit Insurance Estimator at: www.fdic.gov/edie
Read more about FDIC insurance online Visit: www.fdic.gov/deposit/deposits
Call toll-free 1-877- ASK-FDIC (1-877-275-3342)
Hearing impaired line 1-800-925-4618
Send questions by e-mail Use the FDIC’s online Customer Assistance Form at: www2.fdic.gov/starsmail
Mail questions : Federal Deposit Insurance Corporation
Attn: Deposit Insurance Outreach Group
550 17th Street, NW Washington, DC 20429