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How US banks protect your money
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 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:
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
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
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
Vulnerabilities of bank accounts
Even though your money is often protected by FDIC deposit insurance, bank accounts still have a number of vulnerabilities.
- Fraudulent activity. It’s important to keep an eye out for suspicious behavior both online and in public. You should never give out your bank account information (account number, PIN, etc.) or use your credit card on websites you do not trust. If someone gets a hold of your bank account or credit card information, you should contact your bank immediately.
- Mistakes. Mistakes happen. Bank or merchant errors can lead to you being overcharged or incurring unnecessary fees. Check your statements and keep electronic or paper copies for reference, and call or visit your bank if you think there is an error. Some banks offer text message alerts that can help you stay on top of your account activity.
- Phishing and other online scams. Phishing scams and malware can lead to your account being compromised, so it’s important to keep an eye out for any suspicious behavior when you’re online. Avoid any links, sketchy websites or email attachments from unfamiliar sources, as scammers can set up fake websites and viruses to steal your information.
- Hacking passwords. With online banking becoming more popular every day, it’s even more important to make sure your passwords are secure. You should always create strong and unique passwords with a mix of upper- and lowercase letters, numbers and special characters if possible. You should avoid using your name or other obvious words and should never use the same password for multiple accounts. If it’s available, 2-factor authentication can provide an extra layer of protection to keep your account secure.
- Phone scams. Watch out for phone calls or text messages from phone numbers claiming to be your bank. Your bank will never contact you to ask for account information, so if you are unsure about the sender, you can hang up and call the bank directly to speak with customer service.
- ATMs. Scammers have been known to place fake card scanners called “card skimmers” over ATM card slots, which can lead to your account information being copied or stolen. Before using an ATM, it never hurts to wiggle the card slot to check if anything feels loose.
- Unsecured Internet access. Watch out for public Wi-Fi when accessing your account and check for https encryption. Hackers may connect to unsecured networks in hopes of intercepting your account information or passwords, so it’s best to do your online banking at home.
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.
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