The Federal Depositors Insurance Corporation, or FDIC, is an independent U.S. government entity tasked with insuring deposits at member banks. Created in 1933 during the Great Depression, the FDIC still serves a valuable role in the modern economy.
Most people are familiar with the “baseline” $250,000 insurance for an individual checking or savings account. However, there’s a common misconception that you must spread your money across a number of different banks to insure more. In reality, depositors are entitled to $250,000 of FDIC insurance per depositor, per account ownership category, per FDIC-insured bank. So, instead of adding more banks, see if adding or adjusting ownership categories will provide the FDIC coverage you seek. There are 12 ownership categories in all, but the four most common are listed below:
| Account Ownership | Coverage limit | Notes |
| Single accounts | $250,000 per owner | This category includes checking accounts, savings accounts, money market deposit accounts, and CDs. |
| Joint accounts | $250,000 per co-owner | To qualify as a joint account, it must have 1) two or more natural persons with 2) equal withdrawal rights and 3) all owners are identified in bank records. |
| Trust accounts | $250,000 x the number of account owners x the number of beneficiaries (up to five) | Generally, formal trust documents are not needed. Simply adding a Payable on Death (POD) beneficiary arrangement is sufficient. Notice coverage only extends up to five beneficiaries – while more than five may be named, no additional FDIC insurance will be offered. |
| Business/Organization Accounts | $250,000 per legal entity per bank | This includes corporations, partnerships, LLCs, and unincorporated associations. |
Next, let’s look at some examples of how this works in practice.
Example 1: Individual
Jane Doe does her banking at ABC Bank. She has the following accounts:
- Checking account with $90,000.
- Savings account with $170,000.
- A joint account held jointly by Jane and her sister with $500,000.
- An account held by a revocable living trust account with three beneficiaries, her niece and two nephews, worth $1.2M.
The accounts in the above example total $1,960,000. Of that, a total of $1,300,000 is FDIC insured. Here’s the breakdown:
| Account Type | Balance | Insured Amount | Uninsured Amount |
| Single Accounts | $260,000 total | $250,000 | $10,000 |
| Joint Account | $500,000 | $500,000 | $0 |
| Revocable Trust Account | $1,200,000 | $750,000 | $450,000 |
| Total | $1,960,000 | $1,500,000 | $460,000 |
- The checking and savings accounts combined are worth $260,000 ($90k + $170k). This exceeds the value of the single account “bucket,” meaning that $250,000 of the $260,000 is insured, while the remaining $10,000 is uninsured. As the single account “bucket” is now full, any new single accounts opened at this bank would not be eligible for FDIC coverage.
- See above.
- The joint account is fully insured. It has two owners with equal withdrawal privileges who are both on record at the bank as account holders, meaning this account is eligible for a total of $500,000 of FDIC insurance ($250,000 x 2 account owners). However, any additional money saved into this account would not be insured, nor would any money Jane saved into a separate joint account.
- Using the formula, we have $250,000 x 1 account owner x 3 beneficiaries = $750,000 of FDIC insurance, meaning the remaining $450,000 is uninsured. Were Jane to add two additional beneficiaries, the total FDIC insurance would increase to $1.25M.
Example 2: A Married Couple
Mike and Carol Brady do their banking at XYZ Bank. They have the following accounts:
- Mike has separate checking and savings accounts containing $90,000 and $170,000, respectively.
- Carol too has separate checking and savings accounts, containing $40,000 and $200,000, respectively.
- A joint account held by Mike and Carol containing $600,000.
- A revocable living trust account with six beneficiaries – Marcia, Jan, Cindy, Greg, Peter and Bobby – worth $2.7M.
| Account Type | Balance | FDIC Insured Amount | Uninsured Amount |
| Mike Single Accounts | $260,000 total | $250,000 | $10,000 |
| Carol Single Accounts | $240,000 total | $240,000 | $0 |
| Joint Account | $600,000 | $500,000 | $100,000 |
| Revocable Trust Account | $2,700,000 | $2,500,000 | $200,000 |
| Total | $3,800,000 | $3,490,000 | $310,000 |
- Just as in the individual example with Jane Doe, Mike’s accounts are aggregated. His total individual accounts are $260,000, meaning $10,000 if uninsured.
- Carol’s accounts total $240,000, meaning she has $10,000 of additional room in her individual accounts bucket which is eligible for FDIC insurance. Note that her excess capacity cannot be used by Mike.
- The joint account contains $600,000. However, only $500,000 of this is insured, and the remaining $100,000 over the joint account cap is not ensured.
- For the trust account, the formula gives us $250,000 x 2 owners (Mike and Carol) x 5 beneficiaries = $2.5M. Note that, even though Mike and Carol have 6 beneficiaries, the FDIC insurance cap does not extend insurance beyond the first 5. Additional beneficiaries may be added beyond 5, as is the case here, but the amount of FDIC insurance does not change.
As shown above, the nature of your accounts held at a given member bank can have a large impact on the amount of FDIC insurance available to you. Careful consideration of the titling of accounts and the naming of beneficiaries can help protect you and your assets while keeping your financial life consolidated at a smaller number of banks.
