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Published: October 8, 2024
Modified: January 6, 2025
Wondering if your savings are fully protected? Maximize FDIC insurance to safeguard your money beyond the standard $250,000 limit. By using the right strategies, you can extend your protection and ensure your deposits are secure across multiple accounts. Let’s explore how to maximize your FDIC insurance today.
Key Takeaways
- FDIC insurance protects up to $250,000 per depositor, per insured bank, and per ownership category, ensuring your money is safe even if the bank fails.
- You can extend your FDIC coverage by spreading deposits across different ownership categories—like individual, joint, and trust accounts—and using multiple FDIC-insured banks.
- Adding beneficiaries to Payable-on-Death (POD) accounts can significantly increase your FDIC insurance coverage, with each beneficiary adding $250,000 in protection.
- As of April 1, 2024, the maximum FDIC insurance coverage for trust accounts with five or more beneficiaries will be $1,250,000 per owner, even if the account has more beneficiaries.
What Is FDIC Insurance?
FDIC insurance protects your deposits in insured banks up to specific limits. This means if your bank fails, the federal government ensures that you won’t lose your money. The standard insurance amount is $250,000 per depositor, per FDIC-insured bank, and per ownership category. It’s important to note that these limits apply to each individual institution separately, so you can spread funds across different banks to increase your coverage.
How FDIC Insurance Works
FDIC insurance covers all deposit accounts at insured banks, such as:
- Checking accounts
- Savings accounts
- Money market deposit accounts
- Certificates of deposit (CDs)
It does not cover investments like stocks, bonds, or mutual funds, even if they were purchased through your bank.
Each depositor is insured up to $250,000 in each ownership category per institution. If you have multiple accounts in the same ownership category at a single bank, they are combined and insured up to this limit. However, you can extend your coverage by using different ownership categories or banks.
While this coverage limit applies to most situations, the FDIC can take extraordinary actions when systemic risks are involved. For instance, in March 2023, when Silicon Valley Bank failed, the FDIC used a systemic risk exception to protect not just insured depositors, but also those with uninsured deposits.
By transferring all deposits to a bridge bank, depositors had full access to their money without any losses, even those whose deposits exceeded the insurance limits. However, such actions are rare and not a part of the standard FDIC insurance process.
Recognizing FDIC Insured Institutions
Many banks display an FDIC sign, indicating they are insured. Spot this sign at bank entrances or windows. You can also ask a bank representative if the bank is FDIC-insured or check the bank’s website for information.
I’ve found that the most reliable way is to use the FDIC’s BankFind ↗ search tool. Almost all banks are covered, but double-checking ensures your deposits are protected.
The Three Main FDIC Ownership Categories
- Single Accounts
A single account is one held in your name alone, where you are the only owner. This includes individual checking or savings accounts. For a single account at an FDIC-insured bank, you’re protected up to $250,000.
Even if you have multiple individual accounts at the same bank, they will be combined and insured up to the total $250,000 limit. However, you can hold similar accounts at a different FDIC-insured bank and receive the same protection there. - Joint Accounts
Joint accounts are shared between two or more people. Each co-owner’s share of the account is insured up to $250,000. This means if you and a spouse jointly own a savings account with $500,000, each of you is insured for your $250,000 share, so the full amount is covered.
Just like single accounts, this coverage is per bank, so holding joint accounts at multiple banks allows you to increase your total insured amount. - Trust Accounts
Trust accounts can either be informal revocable trusts, like Payable on Death (POD) accounts, formal revocable trusts, or irrevocable trusts. Each beneficiary in a trust account is insured up to $250,000, per institution.
For example, if you have a revocable trust account with three beneficiaries at an FDIC-insured bank, your trust could be insured for up to $750,000 ($250,000 per beneficiary).
Starting April 1, 2024, the maximum insurance coverage for a trust owner with five or more beneficiaries is $1,250,000 per owner. This change applies to both existing and new trust accounts. You can name as many beneficiaries as you wish, but the total coverage limit will not exceed $1,250,000 per trust owner at any FDIC-insured institution.
Example: Putting It All Together with Multiple Ownership Categories
The following example shows how FDIC insurance can work when using different ownership categories at an FDIC-insured bank. While the sums of money in this example are quite large, they are used for illustration purposes only. Regardless of the size of your deposits, these same principles can help ensure that your money is fully protected under FDIC insurance.
This example is based on a scenario from the FDIC’s Your Insured Deposits ↗.
Ownership Categories and Accounts for Married Couple John and Jane
| Ownership Category | Owner(s) | Beneficiaries | Insurable Amount |
|---|---|---|---|
| John’s Single Account | John | N/A | $250,000 |
| Jane’s Single Account | Jane | N/A | $250,000 |
| John & Jane Joint Account | John & Jane | N/A | $500,000 |
| John’s POD Trust Account | John | Jane | $250,000 |
| Jane’s POD Trust Account | Jane | John | $250,000 |
| John & Jane’s Formal Revocable Trust Account | John & Jane | Child 1, 2, 3 | $1,500,000 |
| John’s IRA (Retirement Account) | John | N/A | $250,000 |
| Jane’s IRA (Retirement Account) | Jane | N/A | $250,000 |
In this example, John and Jane have various deposit accounts across multiple ownership categories at an FDIC-insured bank. Let’s break down the coverage:
- John’s Single Account is fully insured for $250,000.
- Jane’s Single Account is also fully insured for $250,000.
- John and Jane’s Joint Account is fully insured up to $500,000, with each co-owner being insured for their $250,000 share.
- John’s Payable-on-Death (POD) Trust Account with Jane as the beneficiary is fully insured for $250,000.
- Jane’s Payable-on-Death (POD) Trust Account with John as the beneficiary is fully insured for $250,000.
- John and Jane’s Formal Revocable Trust Account names three beneficiaries (their children). Each beneficiary is insured for $250,000 per owner, resulting in a total insurance coverage of $1,500,000 for this account.
- John’s IRA (Certain Retirement Account) is insured up to $250,000.
- Jane’s IRA (Certain Retirement Account) is insured up to $250,000.
Total Insured Amount
By using different ownership categories and account types, John and Jane have a combined FDIC-insured total of $3,500,000 at the same bank.
How to Maximize Your FDIC Insurance Coverage
You can maximize your FDIC coverage by using these strategies:
- Open accounts in different ownership categories: Each category—like individual, joint, and certain retirement accounts—is insured separately, and the coverage is unique to each institution. This allows you to hold more than $250,000 in one bank while maintaining full coverage across ownership categories.
- Use multiple FDIC-insured banks: If your deposits exceed the $250,000 limit at one bank, you can open accounts at other FDIC-insured banks to expand your coverage. Each bank will offer you protection for up to $250,000 per ownership category.
- Take advantage of payable-on-death accounts: Adding beneficiaries to a payable-on-death (POD) account increases the amount of coverage you can receive. Each beneficiary can add an additional $250,000 in insurance coverage, significantly increasing protection, and this applies per institution.
What’s New for 2025?
The FDIC’s insurance coverage limits have not changed between 2024 and 2025.
The FDIC has introduced a new signage rule to help consumers better understand deposit insurance coverage. Originally set to take effect on January 1, 2025, the compliance deadline has been extended to May 1, 2025. This rule requires banks to update signage and disclosures to clearly indicate which financial products are insured by the FDIC and which are not.
Final Thoughts
FDIC insurance is a critical safeguard for protecting your money in the banking system. By strategically managing your accounts across ownership categories and using multiple banks, you can ensure that more than $250,000 of your deposits are insured at each institution. Understanding how these limits work helps you rest easy knowing that your money is safe, no matter what happens.
To learn more about investing and investment strategies, see Investments.