After two of the largest bank failures in U.S. history — the collapse of Silicon Valley Bank on Friday followed by the downfall of Signature Bank on Sunday — you may be wondering if your own deposits are safe.
While the federal government now says depositors at both institutions will be able to get all of their money — including holdings beyond the Federal Deposit Insurance Corporation (FDIC) insurance limit — back in a timely fashion, that’s not always the case when a bank fails.
The FDIC usually steps in to find a healthy bank to take over the collapsed institution. In the event that the FDIC is unable to find a buyer for a failed bank, depositors with account balances over the maximum can be at risk of losing money. (Of note: That's only happened once in the past decade, when a small bank in Connecticut failed.)
So you definitely don’t need to panic, but it’s also better to be safe than sorry. And it’s relatively easy to make sure that your deposits are covered by FDIC insurance, even if you have a lot of money.
How to find out if your money is FDIC-insured
There are three quick ways to check if the FDIC insures your bank or savings association, according to the agency.
You can use the FDIC's Bank Find website, call the agency at 1-877-275-3342 or look for official FDIC signage at banking locations. Nearly all U.S. banks are insured by the FDIC, but there’s no harm in confirming for peace of mind.
Plus, your bank being insured by the FDIC doesn’t guarantee that all your money is backed by the agency. It’s important to understand what is and isn’t covered by the FDIC.
The FDIC's deposit insurance covers checking accounts, savings accounts, certificates of deposit (CDs) and more. The limit is $250,000 per depositor, per account type, per institution. But the FDIC does not cover your investments in things like stocks, bonds, mutual funds and crypto.
Limits of FDIC coverage
As of 2019, the typical household had a mean of $41,600 in their transaction accounts, meaning that for lots of Americans, there’s not much to worry about in terms of the FDIC’s coverage limits.
If you have less than $250,000 in the bank and the funds are in an eligible account, you’re good: The FDIC likes to boast in news releases that "since 1933, no depositor has ever lost a penny of FDIC-insured funds."
Matters get more complicated if you’re holding more than that amount, but there are ways to guarantee your money is covered.
- You can spread your funds across multiple banks to increase your total coverage. For example, if you have three checking accounts with three different banks, you’d then have a total limit of $750,000. Just be careful that your accounts aren’t at separate branches of the same bank.
- If you open a joint account with your spouse, the coverage limit doubles to $500,000, assuming the account meets several requirements.
- Lastly, if you have money in different types of accounts with the same bank, you may qualify for coverage beyond $250,000. The FDIC defines multiple “ownership categories,” so you’ll need to read the fine print and make sure the accounts aren’t in the same category. As always, consider consulting a professional.