What is the FDIC and what does it do?

The Federal Deposit Insurance Corporation (FDIC) is an independent U.S. government agency that insures deposits and supervises banks. If an FDIC-insured bank fails, FDIC insurance protects your deposits up to $250,000 per depositor, per insured bank, for each account ownership category.

You don’t need to apply for or pay for this coverage. It’s automatic when you open a deposit account at an insured bank. Regions is an FDIC-insured bank, and you can learn how FDIC insurance applies to your Regions deposits. Still, it’s important to know how much coverage you can get and what’s not covered when it comes to protecting your money.

Key takeaways

• FDIC insurance covers up to $250,000 per depositor, per insured bank, for each ownership category. The limit is not per account.
• Checking, savings, money market accounts and certificates of deposit (CDs) are covered. Stocks, bonds, mutual funds, annuities, crypto assets and safe deposit box contents are not, even when you buy them through a bank.
• Accounts in different ownership categories, such as single, joint, retirement and trust accounts, are insured separately. That means one person can have more than $250,000 in coverage at the same bank.
• Banks pay premiums to fund deposit insurance, so depositors don’t pay for it.

What does the FDIC do?

The FDIC helps keep the U.S. banking system stable and maintains public confidence in it. Congress created the FDIC through the Banking Act of 1933, after many banks failed during the Great Depression. Today, the FDIC:

• Insures deposits at member banks
• Examines and supervises banks for safety, soundness and consumer protection
• Plans for how large, complex banks could fail without disrupting the financial system
• Steps in when a bank fails to protect insured depositors and manage the failed bank’s remaining assets

The FDIC doesn’t rely on money from Congress to pay for deposit insurance. Banks pay premiums for their coverage, and those premiums fund it. According to the FDIC, no depositor has lost any insured funds due to bank failure since coverage began in 1934.

Is FDIC insurance free?

Yes. FDIC insurance is automatic and free for depositors. You do not need to sign up, opt in or pay anything for your deposit account to be insured.

Coverage includes your principal and any interest earned through the date an insured bank fails, up to the insurance limit.

How much does FDIC insurance cover?

The standard coverage amount is $250,000 per depositor, per insured bank, for each account ownership category. This means that if you have multiple accounts at the same bank, your insurance coverage is determined separately by account type and ownership category (such as single, joint and business accounts).

The FDIC adds together all of your accounts in the same ownership category at the same bank. For example, say you have $20,000 in checking, $200,000 in savings and a $40,000 CD, all in your name alone at one bank. Those accounts total $260,000, so $250,000 is insured and $10,000 is not. This example is for illustration only.

Accounts in different ownership categories are insured separately. Deposits held at different FDIC-insured banks are insured separately. Accounts at different branches of the same bank are not.

Single accounts

A single account is an account owned by one person. This can include checking accounts, savings accounts, CDs and money market accounts. FDIC insurance covers up to $250,000 for all of the single accounts one person owns at the same bank.

If you’re choosing an everyday account, you can compare checking accounts to see which one fits how you bank.

Joint accounts

A joint account is an account owned by two or more people. The FDIC adds together each co-owner’s share of all joint accounts at the same bank. It then insures each person’s total up to $250,000, as long as FDIC requirements are met.

For example, if you and your spouse share joint accounts at one bank, each of you is insured up to $250,000 for your share, including your share of deposits held in any other jointly owned accounts at the same bank. Joint accounts are also insured separately from each owner’s single accounts. Learn more about joint bank accounts.

Certain retirement accounts

Deposits held in a defined retirement account, such as a CD or savings account inside an IRA, 457 plans, and certain self-directed 401(k) and self-directed defined contribution plans, can be FDIC-insured. Investments held in a retirement account, such as stocks, bonds or mutual funds in a 401(k) or IRA, are not FDIC insured.

FDIC deposit insurance covers retirement deposit accounts in which plan participants are self-directed as defined by the FDIC.

All retirement deposit accounts classified in this category owned by the same person at the same bank are added together and insured up to a total of $250,000. To see how different IRAs work, read our guide to IRA account types.

Trust accounts

Trust accounts include formal revocable and irrevocable trusts, as well as payable-on-death (POD) accounts that name beneficiaries.

Since April 1, 2024, the FDIC has insured an owner’s trust deposits up to $250,000 for each eligible beneficiary. Coverage is generally calculated at $250,000 per beneficiary for up to five beneficiaries, but coverage can exceed $1.25 million in certain situations involving multiple owners.

Although the FDIC has simplified trust insurance rules, coverage for certain trust arrangements may still depend on the specific facts and circumstances. Consider reviewing large trust deposits with an estate planning professional. Regions offers trust and estate planning services.

ERISA-covered employee benefit plan accounts

An employee benefit plan account holds money for certain pension plans, defined benefit plans or similar ERISA-covered employee benefit plans. In these accounts, a plan administrator makes investment decisions, not the participants. Each participant’s non-contingent interest in the plan is insured up to $250,000 per bank. For plans where the interests are contingent, such as health and welfare plans, the coverage is $250,000 for the plan itself.

Business accounts

Corporation, partnership and unincorporated association deposit accounts are bank deposit accounts established by businesses and organizations. FDIC insurance covers qualifying business deposits up to a total of $250,000 for combined qualifying business accounts, which are insured separately from the personal accounts of stockholders, partners and members.

To qualify for this coverage, the business must be engaged in an independent activity. That means it operates primarily for some purpose other than increasing deposit insurance. Separate accounts owned by the same business but designated for different purposes are not separately insured.

Deposits owned by a sole proprietorship or DBA are not insured under this category. They’re treated as the owner’s single accounts. If you’re comparing options for your company, explore business checking accounts.

What does FDIC insurance cover, and what doesn’t it cover?

FDIC insurance covers deposit products at insured banks. It does not cover investment products, even if you buy them through a bank.

FDIC insurance covers eligible deposits in:

• Checking accounts
• Savings accounts
• Certificates of deposit (CDs)
• Money market accounts
• Negotiable order of withdrawal (NOW) accounts
• Official checks and money orders issued by a bank
• Prepaid debit card deposits held in a bank, when certain FDIC requirements are met

Everyday accounts, such as Regions checking accounts, are deposit accounts, so they’re covered up to the limits described above.

FDIC insurance does not cover:

• Stocks, bonds and mutual funds
• Life or other insurance policies
• Annuities
• Crypto assets
• Municipal securities
• Safe deposit boxes or their contents

Credit unions aren’t insured by the FDIC. Their deposits are insured by a separate federal agency, the National Credit Union Administration (NCUA). To check whether a bank is FDIC-insured, you can search for it with the FDIC’s BankFind tool.

What happens if your bank fails?

If an FDIC-insured bank fails, the FDIC steps in to protect insured deposits. In most cases, the FDIC arranges for another bank to take over the failed bank’s deposits, and your insured money moves to that bank. The new bank may offer different account terms, such as a different interest rate.

If no bank takes over the deposits, the FDIC pays depositors directly, up to the insurance coverage limits. In most cases, depositors gain access to insured funds shortly after a bank failure, often within a few business days.

Money above the insurance limit isn’t protected by FDIC insurance. Depositors with uninsured funds may get some of that money back as the FDIC sells the failed bank’s assets, but they could lose all or part of it.

How to protect more than $250,000

If you have more than $250,000 in deposits, there are several ways to keep more of your money insured:

• Use different ownership categories. Money in single, joint, retirement and trust accounts is insured separately, as long as FDIC requirements are met.
• Add eligible beneficiaries to qualifying accounts. Naming eligible beneficiaries on qualifying trust or POD accounts may increase FDIC insurance coverage, depending on account structure and FDIC requirements.
• Check your total before you move money. The FDIC’s Electronic Deposit Insurance Estimator (EDIE) shows how much of your money is insured based on how your accounts are owned.

The standard coverage limits are set by federal law and are the same at every FDIC-insured bank. For more details, visit the FDIC’s deposit insurance resources.

If your balances are approaching the coverage limit or you’d like help reviewing how your accounts are titled, a Regions banker can walk through your options with you.

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