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How banks protect the money in your accounts

How US banks protect your money

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Find out what accounts are insured up to the $250,000 limit and how to safeguard your money.

You work hard to save money and trust your bank to keep it safe in your savings account. But what happens if the bank were to go bankrupt? Learn more about the Federal Deposit Insurance Corporation (FDIC) and how it protects your deposits in FDIC-insured institutions.

FDIC deposit insurance

The Federal Deposit Insurance Corporation (FDIC) is a US government agency that guarantees deposits up to $250,000 in FDIC-insured banks or savings associations. This means that if the institution were to collapse or fail, you would be fully reimbursed up to $250,000.

FDIC deposit insurance limit

The $250,000 limit applies per depositor, per institution and per ownership category. Ownership category simply refers to whether the account is owned by one person (single) or is shared (joint). Depending on the size of your deposits, it might make sense to hold accounts at different institutions to ensure that all of your money is covered. Consider the following scenarios:

  • Samantha holds $200,000 in savings and CDs and $100,000 in her checking account — all at the same bank. If the bank were to fail, she would lose $50,000.
  • Henry holds $200,000 in savings and CDs and $100,000 in a joint checking account, though all accounts are at the same bank. If the bank were to fail, all of his money would be insured since he holds less than $250,000 in each ownership category.
  • Jessica holds $200,000 in savings and CDs at one bank and $200,000 in her checking account at a different bank. In the event that both banks failed, all of her money would be insured.

Do I need to apply for FDIC deposit insurance?

No. FDIC deposit insurance automatically applies to deposits at FDIC-insured financial institutions, so you won’t need to apply or take any further steps. As long as your funds are deposited at an institution that is FDIC-insured, you will be covered for up to $250,000 in the event that the institution fails. FDIC deposit insurance even applies to people who are not residents or even citizens of the US, as long as the deposit is made at an FDIC-insured institution.

How do I know if an institution is FDIC-insured?

FDIC-insured institutions often display an FDIC sign at branches, but you can also call the FDIC or use the BankFind tool on the FDIC website, which lists all FDIC-insured institutions.

What types of accounts does the guarantee cover?

FDIC deposit insurance covers a multitude of accounts, including:

What types of accounts aren’t guaranteed?

The FDIC does not guarantee any of the following funds:

What happens if the bank goes bankrupt?

Are you still protected under the guarantee if your bank goes bankrupt? The short answer is yes. If your institution is FDIC-insured and it goes bankrupt, you are protected so long as your account balance doesn’t exceed $250,000.

If your bank were to fail, the FDIC would attempt to sell existing deposits and loans to a more stable institution. If this happens, your accounts would be transferred to the new bank and you would retain access to your money. However, if the failed institution isn’t sold, you would receive checks from the FDIC for the insured balances of your accounts, usually within a few business days of your bank’s closing. If any further action is required, you would be contacted by the FDIC.

There are many US-owned banks and foreign subsidiaries that are covered by FDIC deposit insurance. Here are the top 25 FDIC-insured financial institutions by deposits held:

  • 1. Bank of America, National Association
  • 2. JPMorgan Chase Bank, National Association
  • 3. Wells Fargo Bank, National Association
  • 4. Citibank, National Association
  • 5. US Bank National Association
  • 6. PNC Bank, National Association
  • 7. TD Bank, National Association
  • 8. Capital One, National Association
  • 9. Branch Banking and Trust Company
  • 10. SunTrust Bank
  • 11. Charles Schwab Bank
  • 12. HSBC Bank USA, National Association
  • 13. The Bank of New York Mellon
  • 14. Marcus by Goldman Sachs®
  • 15. KeyBank, National Association
  • 16. Fifth Third Bank
  • 17. Morgan Stanley Bank, National Association
  • 18. Regions Bank
  • 19. Manufacturers and Traders Trust Company
  • 20. Citizens Bank, National Association
  • 21. MUFG Union Bank, National Association
  • 22. Ally Bank
  • 23. State Street Bank and Trust Company
  • 24. The Huntington National Bank
  • 25. BMO Harris Bank, National Association
  • Compare top FDIC-insured savings accounts

    Name Product Minimum deposit Fee APY
    Synchrony Bank High Yield Savings
    $0
    $0
    1.85%
    Earn one of the highest interest rates without the fees
    HSBC Direct Savings
    HSBC Direct Savings
    $1
    $0
    1.8%
    Get one of the highest interest rates available without high balance requirements or fees
    BBVA Compass ClearChoice Money Market Account
    $25
    $15/quarter
    (can be waived)
    1.7%
    Earn one of the highest interest rates if you have at least $10,000 in savings
    CIT Bank Premier High Yield Savings Account
    $100
    $0
    1.55%
    Earn a high interest rate with no monthly fees

    Compare up to 4 providers

    How effective is FDIC deposit insurance?

      The FDIC was created in 1933 to promote public confidence in the US banking system and has issued billions of dollars in payouts since its inception. In fact, there hasn’t been a single depositor that has ever lost a penny of insured deposits since the FDIC was created, despite more than 500 failures since 2000 alone. Here are a few of the most recent:

      • Washington Federal Bank for Savings
      • The Farmers and Merchants State Bank of Argonia
      • Fayette County Bank
      • Guaranty Bank (aka BestBank in Georgia and Michigan)
      • First NBC Bank
      • Proficio Bank
      • Seaway Bank and Trust Company
      • Harvest Community Bank
      • Allied Bank
      • The Woodbury Banking Company

      Bottom line

      Most savings accounts in the US are offered by banks that carry FDIC insurance, so as long as the bank you choose is as well, your money will be protected even if the institution goes belly up. Generally speaking, that assurance frees you up to focus on comparing savings accounts that best meet your financial needs, like those that offer a competitive interest rate, low or no fees, low or no minimum balances and convenient ways to access your money.

      Shirley Liu

      Shirley Liu is a program manager at finder, formerly the publisher for Banking and Investments. She is passionate about helping people make an informed decision, save money and find the best deal for their needs.

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