FDIC Insurance and Your Money

However, if you have money in a bank located in the United States (rather than stock, mutual funds, and many other investments), your deposits are insured by the Federal Deposit Insurance Corporation (FDIC) for loss in the event that an insured bank fails. While the money must be in an insured bank physically in the United States, depositors don't have to be American -- the citizenship of the depositor can be in any country. As of November 8, 2010, the FDIC provides insurance to 7,723 financial institutions that is backed by the full faith and credit of the United States government.

Every type of deposit accepted by an insured bank is covered by the FDIC; this includes checking deposits, savings deposits, money market account deposits, certificates of deposit, and negotiable order of withdrawal accounts. Since the inception of the FDIC, no depositor has ever lost a cent of their FDIC-insured deposits. Your money is insured 100% on the dollar along with interest accrued, up to the limit.

So what is the limit? The standard amount is $250,000 per depositor, per insured bank for each account ownership category. This means that you can have a $250,000 checking account at one bank, a $250,000 checking account at another bank along with a $250,000 savings account - everything is covered. The reason you can have the max amount covered in checking and savings is that these are considered different "ownership categories," even in the same bank. However, funds deposited in separate branches of the same insured bank are not separately insured. For example, you have $250,000 in New York branch of a bank and more money in the Houston branch, only the first $250,000 would be protected. However, if the amounts in the separate branches are equal to or less that $250,000 when combined, all is good.

There is plenty that is not insured by the FDIC. This includes money in stocks, bonds, mutual funds, life insurance, annuities, or municipal securities. These exclusions still hold true, even if the investments are purchased from an insured bank. Also, the FDIC does not cover treasury bills, bonds and notes although these investments are still stated to be backed by the "full faith and credit of the United States government." Additionally, the contents in a safe deposit box at an insured institution are also not covered by FDIC insurance.