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Advice

How FDIC insurance works, plus a breakdown of coverage limits

When you open a deposit account, it's likely that it's FDIC-insured up to the standard $250,000. Here's what FDIC insurance is and how it works.

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When you open a deposit account, such as a savings or checking account, you may see a notice stating the account is FDIC-insured.

The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the U.S. government that protects and reimburses your deposits up to the legal limit of $250,000 in the event your FDIC-insured bank fails.

Though it's not very common, a bank can fail when it takes on too much risk, such as extending credit to borrowers that wind up defaulting. When this happens, the bank goes belly up, putting its customers' assets in jeopardy. But thanks to FDIC insurance, you can receive reimbursement up to the maximum amount so your funds aren't lost for good.

FDIC insurance covers checking, savings and other deposit accounts up to a standard amount of $250,000 — but there are a few caveats. Namely, the $250,000 limit is per account holder, not per account, like you might think.

But before we dive into insurance limits, here are the basics about FDIC insurance you need to know.

What's covered by FDIC insurance?

The FDIC covers many common deposit accounts, but it doesn't insure investment accounts. Here are the following types of covered accounts:

  • Checking accounts
  • Savings accounts
  • Negotiable order of withdrawal (NOW) accounts
  • Money market deposit accounts (MMDAs)
  • Time deposits such as certificates of deposit (CDs)
  • Cashier's checks, money orders and other official items issued by a bank

Meanwhile, these accounts are ineligible for FDIC coverage:

  • Stock investments
  • Bond investments
  • Mutual funds
  • Life insurance policies
  • Annuities
  • Municipal securities
  • Safe deposit boxes or their contents

FDIC coverage limits

The standard coverage limit is $250,000 per account owner, per each of the ownership categories we include in the table below. 

That means you could technically qualify for more than $250,000 in coverage if you hold accounts in more than one ownership category, either as an individual or with a joint account holder.

For instance, a couple with a joint checking account that's FDIC-insured can receive insurance for up to $500,000 for the same shared account ($250,000 per co-owner). And if each of you open your own individual checking account separately (under the category of "single account") it would also have its own $250,000 coverage on top of your joint checking's $500,000 coverage.

You can also see that trusts, benefit plans and other accounts factor in whether there are beneficiaries, participants or custodians connected to it.

Here's a breakdown of the FDIC coverage broken up by type of account owner. 

FDIC deposit insurance coverage limits

Type of account owner category Coverage limit
Single accounts$250,000 per owner
Joint accounts$250,000 per co-owner
Certain retirement accounts$250,000 per owner
Revocable trusts$250,000 per owner per unique beneficiary
Corporation, partnership and unincorporated association$250,000 per corporation, partnership or unincorporated association
Irrevocable trusts$250,000 per unique beneficiary that's entitled to the account
Employee benefit plans$250,000 per plan participant that's entitled to the account
Government accounts$250,000 per official custodian (more coverage may be available)

FDIC insured checking and savings accounts

Most checking accounts and savings accounts provided by major banks offer the standard FDIC insurance. Lots of these checking accounts also come with no monthly maintenance fees, which can save you up to $15 a month. 

As for savings, going with an FDIC-insured high-yield savings account can earn you more than 10 times the national interest rate.

Here are some of CNBC Select's top-rated checking and savings accounts.

Capital One 360 Checking®

Capital One 360 Checking®
Information about the Capital One 360 Checking® Account has been collected independently by CNBC and has not been reviewed or provided by the bank prior to publication. Capital One is a Member FDIC.
  • Monthly maintenance fee

    $0

  • Minimum deposit to open

    $0

  • Minimum balance

    None

  • Annual Percentage Yield (APY)

    0.10%

  • Free ATM network

    39,000+ Capital One® and Allpoint® ATMs

  • ATM fee reimbursement

    None

  • Overdraft fee

    $35 if you opt-in to Next Day Grace

  • Mobile check deposit

    Yes

See our methodology, terms apply.

Pros

  • Top-rated mobile app
  • No minimum deposit to open an account
  • 0.10% APY on all account balances
  • No foreign transaction fee
  • Free savings transfer for overdrafts after opt-in

Cons

  • No reimbursement for out-of-network ATM fees
  • $35 overdraft fee if you opt-in to Next Day Grace

Ally Interest Checking Account

Ally Interest Checking Account
Information about the Ally Interest Checking Account has been collected independently by CNBC and has not been reviewed or provided by the bank prior to publication. Ally is a Member FDIC.
  • Monthly maintenance fee

    $0

  • Minimum deposit to open

    $0

  • Minimum balance

    None

  • Annual Percentage Yield (APY)

    0.10% less than $15,000 minimum daily balance; 0.50% over $15,000 minimum daily balance

  • Free ATM network

    43,000+ Allpoint® ATMs

  • ATM fee reimbursement

    Up to $10 per statement cycle

  • Overdraft fee

    $25

  • Mobile check deposit

    Yes

See our methodology, terms apply.

Pros

  • Top-rated mobile app
  • No minimum deposit to open an account
  • ATM fee reimbursement up to $10 per statement cycle
  • 0.10% or 0.50% APY, depending on daily account balance

Cons

  • $25 overdraft fee

Marcus by Goldman Sachs High Yield Online Savings

Marcus by Goldman Sachs High Yield Online Savings
Information about the Marcus by Goldman Sachs High Yield Online Savings has been collected independently by CNBC and has not been reviewed or provided by the bank prior to publication. Goldman Sachs Bank USA is a Member FDIC.
  • Annual Percentage Yield (APY)

    0.60%

  • Minimum balance

    None to open; $1 to earn interest

  • Monthly fee

    None

  • Maximum transactions

    Up to 6 free withdrawals or transfers per statement cycle

  • Excessive transactions fee

    None

  • Overdraft fees

    N/A

  • Offer checking account?

    No

  • Offer ATM card?

    No

See our methodology, terms apply.

Pros

  • No minimum balance (just $1 to earn interest)
  • No monthly fees
  • Up to 6 free withdrawals or transfers per statement cycle
  • Easy-to-use mobile banking app
  • Offers no-fee personal loans

Cons

  • No option to add a checking account
  • No ATM access
  • You can't deposit a check via the mobile app

Synchrony Bank High Yield Savings

Synchrony Bank High Yield Savings
Information about the Synchrony Bank High Yield Savings has been collected independently by CNBC and has not been reviewed or provided by the bank prior to publication. Synchrony Bank is a Member FDIC.
  • Annual Percentage Yield (APY)

    0.65%

  • Minimum balance

    None

  • Monthly fee

    None

  • Maximum transactions

    Up to 6 free withdrawals or transfers per statement cycle

  • Excessive transactions fee

    None, but may result in account closure

  • Overdraft fees

    N/A

  • Offer checking account?

    No

  • Offer ATM card?

    Yes

See our methodology, terms apply.

Pros

  • Strong APY
  • No minimum balance
  • No monthly fees
  • Up to 6 free withdrawals or transfers per statement cycle
  • Easy ATM access
  • 1 physical branch (in Bridgewater, New Jersey)

Cons

  • Account could close if you make more than 6 transactions in a statement cycle
  • No option to add a checking account
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the CNBC Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.