FDIC Insurance

Stock trading dictionary: meaning, example and how traders use it.

Last updated: October 17, 2026

Definition: FDIC Insurance is protection provided by the Federal Deposit Insurance Corporation, a US government agency, that guarantees deposits at insured banks up to $250,000 per depositor, per insured bank, for each account ownership category.

How FDIC insurance works

The FDIC was created in 1933 in response to widespread bank failures. Insured banks pay premiums into the Deposit Insurance Fund, which is backed by the full faith and credit of the US government. If an insured bank fails, the FDIC pays depositors up to the insured limit, typically by transferring accounts to another bank or issuing payments. Depositors do not need to apply for coverage; it is automatic when you open an account at an FDIC-insured bank.

The standard coverage amount is set by law and has been changed only rarely; it applies automatically to every eligible deposit account. Since its creation, no depositor has lost insured funds in an FDIC-insured account, which is a key reason the system supports public confidence in banks.

What FDIC insurance covers and does not cover

Covered deposit products include checking and savings accounts, money market deposit accounts and certificates of deposit (CDs).

Not covered are investment products, even if bought through a bank: stocks, bonds, mutual funds, ETFs, annuities, crypto assets, Treasury securities, and the contents of safe deposit boxes. Losses from market declines are an investment risk, not a bank failure, and are never insured by the FDIC. Treasury securities are backed separately by the US government.

FDIC coverage example

Suppose a person has $200,000 in a checking account and $100,000 in a CD at the same bank, both in her own name. Both are in the single-ownership category, so they are added together: $300,000, of which $250,000 is insured. If she instead held $150,000 individually and $150,000 in a joint account with her spouse, coverage could be higher, because joint accounts are a separate ownership category with coverage for each co-owner. Retirement deposits, such as CDs held in an IRA, form yet another category. Spreading money across different insured banks also adds coverage.

FDIC vs SIPC protection

Brokerage accounts are generally protected by the Securities Investor Protection Corporation (SIPC), not the FDIC. SIPC helps customers recover cash and securities if a member broker fails and assets are missing, up to its own limits. Like the FDIC, SIPC does not protect against market losses. Many brokers sweep uninvested cash into partner bank deposits, which may then be eligible for FDIC coverage; check how your broker's sweep program works.

Practical tips

  • Confirm a bank is insured using the FDIC's BankFind tool.
  • Track balances by ownership category at each bank.
  • Remember that investment risks in stocks and funds are not insured.
  • For cash needed in a portfolio, consider how both FDIC and SIPC rules apply, as well as the liquidity of each holding.

Frequently asked questions

Is my money insured over $250,000?

Standard FDIC coverage is $250,000 per depositor, per insured bank, per ownership category. You may have more total coverage by using different ownership categories or different insured banks.

Does FDIC insurance cover stocks?

No. Stocks, bonds, mutual funds, ETFs and other investment products are not covered by FDIC insurance, even if purchased at a bank.

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For information only, not investment advice. See the disclaimer.