Are CDs FDIC Insured? How Your Deposits Are Protected

Certificates of Deposit (CDs) are a common savings tool, offering a fixed interest rate for a set period. Understanding how these financial products are protected is important for depositors. This article explains the role of federal deposit insurance in safeguarding CD investments.

Understanding FDIC Deposit Insurance

The Federal Deposit Insurance Corporation (FDIC) is an independent federal agency established to maintain stability and public confidence in the U.S. financial system. Its primary role involves insuring deposits at FDIC-member banks, protecting account holders in the event of a bank failure. The FDIC operates by collecting premiums from its member institutions, which fund the agency’s deposit insurance coverage. Since its inception in 1933, no depositor has lost FDIC-insured funds due to a bank failure. FDIC insurance covers various deposit accounts, including checking, savings, money market accounts, and Certificates of Deposit.

How Certificates of Deposit are Insured

Certificates of Deposit are covered by FDIC insurance. This protection extends up to $250,000 per depositor, per insured bank, for each account ownership category. This limit applies to the combined total of all covered accounts a depositor holds in the same ownership capacity at a single insured bank. For instance, if an individual has multiple CDs or a combination of CDs and savings accounts at one bank under their sole name, the total balance across these accounts is insured up to $250,000. The $250,000 limit includes both the principal amount deposited and any accrued interest on the CD.

Expanding Your FDIC Coverage

Depositors can increase their FDIC insurance coverage beyond the standard $250,000 limit by utilizing different ownership categories. Each distinct ownership category at the same insured bank receives separate coverage of up to $250,000.

Ownership Categories for Expanded Coverage

A single account owned by one person is insured up to $250,000.
A joint account, owned by two or more individuals, is insured up to $250,000 per co-owner, effectively providing $500,000 in coverage for two joint owners.
Retirement accounts, such as IRAs, constitute a separate ownership category, allowing for an additional $250,000 in coverage for the owner.
Certain trust accounts also offer expanded coverage based on the number of qualifying beneficiaries, potentially extending protection beyond the standard limit.

Confirming Your Deposits are Protected

Verifying that your bank and CD deposits are FDIC insured is straightforward. Insured banks typically display the official FDIC sign at their branches and on their websites. You can also use the FDIC’s online BankFind tool to confirm a bank’s insurance status and access detailed information. Another option is to contact the FDIC directly via their toll-free number. FDIC insurance specifically covers deposit accounts and does not extend to investment products like stocks, bonds, mutual funds, or the contents of safe deposit boxes. Accounts at non-insured institutions, such as credit unions, are covered by the National Credit Union Administration (NCUA).