Is a Traditional Savings Account FDIC Insured?

A savings account is one of the most common ways to store money securely while earning interest. Many people wonder whether their deposits are protected if a bank fails.

Understanding deposit insurance helps account holders ensure their funds are safeguarded.

FDIC Insurance Requirements

The Federal Deposit Insurance Corporation (FDIC) was established in 1933 to restore confidence in the banking system after the Great Depression. Under the Federal Deposit Insurance Act, the FDIC insures deposits at member banks in case of failure. To qualify, a bank must meet regulatory standards for capital adequacy, risk management, and consumer protection. Banks that comply display the official FDIC sign at branches and on their websites.

FDIC insurance covers checking accounts, savings accounts, money market deposit accounts (MMDAs), and certificates of deposit (CDs). It does not apply to investment products like stocks, bonds, mutual funds, or annuities, even if purchased through an FDIC-insured bank. Deposits must also be held at a domestic branch of an FDIC-insured institution, as foreign branches of U.S. banks are not covered.

Traditional Savings Accounts Coverage

Traditional savings accounts are insured as long as they are held at an FDIC member institution. This protection applies to both individual and joint accounts, covering the full principal balance and any accrued interest up to the applicable limit.

If a bank fails, the FDIC steps in as receiver, liquidates assets, and reimburses depositors. Insured balances are typically paid out within a few business days after a bank closure.

Some savings accounts fall under different ownership categories, such as revocable trust accounts or those with payable-on-death (POD) beneficiaries. These designations affect how coverage is calculated and can increase the insured amount based on the number of beneficiaries.

Maximum Insurance Limits

The FDIC insures deposits up to $250,000 per depositor, per insured bank, for each account ownership category. This limit, set by the Dodd-Frank Wall Street Reform and Consumer Protection Act, applies separately to single accounts, joint accounts, and certain trust accounts.

For example, an individual with $250,000 in a personal savings account and another $250,000 in a joint account with a spouse would have full coverage on both deposits. Revocable trust accounts receive up to $250,000 in coverage per beneficiary, allowing for higher insured amounts in estate planning. Businesses and nonprofit organizations also receive separate coverage.

To maintain full coverage on large balances, depositors often distribute funds across multiple FDIC-insured institutions. The IntraFi Network Deposits service (formerly CDARS and ICS) facilitates this by spreading large deposits among participating banks while maintaining a single banking relationship.

Exclusions from Coverage

FDIC insurance does not cover investment products such as stocks, bonds, mutual funds, or exchange-traded funds (ETFs), even if purchased through an FDIC-insured bank. Annuities and life insurance policies underwritten by banks are also excluded, as they are classified as investment or insurance products rather than deposit accounts.

Other uninsured instruments include repurchase agreements (repos) and safe deposit box contents. Storing cash or valuables in a bank’s safe deposit box does not provide FDIC protection, as these items are not considered deposits. If a bank fails, customers must rely on the institution’s security policies and insurance arrangements for safe deposit box losses.

Certain high-yield accounts offered by fintech companies in partnership with banks may also present coverage challenges. Some of these accounts sweep funds into partner banks for FDIC protection, but coverage depends on how the funds are structured and whether the customer is recognized as a direct depositor at the insured institution. Depositors should review account agreements carefully to avoid unexpected gaps in coverage.

Verifying FDIC Membership

Ensuring a bank is FDIC-insured is essential for depositors who want to confirm their funds are protected. While most traditional U.S. banks participate in the FDIC program, some financial institutions, including credit unions and certain online platforms, may not be covered.

One way to verify a bank’s FDIC status is through the FDIC’s BankFind tool, an online database that allows users to search for insured institutions by name, location, or FDIC certificate number. Member banks must also display the official FDIC logo at branches and on their websites. However, some fraudulent entities may use similar branding to appear insured. Depositors should cross-check information directly with the FDIC to confirm legitimacy.

For accounts held at fintech companies or brokerage firms offering cash management accounts, verifying FDIC coverage requires additional scrutiny. Many of these firms partner with multiple banks to provide deposit insurance through a sweep program, where customer funds are distributed across several insured institutions. While this can increase coverage limits, depositors should ensure their names are recorded as account holders at the partner banks. Reviewing account agreements and requesting a list of participating institutions can help clarify whether funds are insured.