When it comes to protecting your money, FDIC insurance is one of the most important safeguards available. Since 1933, the Federal Deposit Insurance Corporation (FDIC) has ensured that depositors don’t lose their money if a bank fails.
However, many people misunderstand how FDIC insurance works. Some believe it covers all types of financial accounts, while others think there’s a way to lose insured deposits. These misconceptions can lead to unnecessary risks or missed opportunities to maximize coverage.
Let’s clear up the most common myths about FDIC insurance and set the record straight!
🚫 Myth #1: FDIC Insurance Covers Any Account at a Bank
✅ Reality: FDIC insurance only covers specific deposit accounts.
What’s Covered?
✅ Checking accounts
✅ Savings accounts
✅ Certificates of Deposit (CDs)
✅ Money Market deposit accounts
✅ Trust accounts (within limits)
What’s NOT Covered?
❌ Stocks, bonds, and mutual funds
❌ Cryptocurrency holdings
❌ Safe deposit box contents
❌ Life insurance policies
❌ Annuities
💡 Tip: If you’re investing in stocks, mutual funds, or crypto, you need separate protections, such as SIPC insurance for brokerage accounts.
🚫 Myth #2: If a Bank Fails, I Could Lose My FDIC-Insured Deposits
✅ Reality: No depositor has ever lost a single penny of FDIC-insured funds.
Since its creation in 1933, the FDIC has always reimbursed depositors when an insured bank fails. If your account falls within coverage limits, you will get your money back.
💡 Example:
If your bank collapses overnight, the FDIC steps in. You either:
1️⃣ Get your money transferred to another insured bank.
2️⃣ Receive a check for the insured amount—usually within a few days.
🚨 Exception: If your balance exceeds FDIC limits, the excess amount could be lost in the bank’s failure.
🚫 Myth #3: FDIC Insurance Covers Unlimited Deposits at One Bank
✅ Reality: FDIC insurance covers up to $250,000 per depositor, per bank, per ownership category.
If you have more than $250,000 in a single account at one bank, anything beyond that is NOT insured.
How to Get More Than $250,000 Insured:
✅ Spread funds across multiple FDIC-insured banks
✅ Use different ownership categories (e.g., joint accounts, trust accounts, retirement accounts)
✅ Use CDARS (Certificate of Deposit Account Registry Service), which spreads large deposits across multiple banks
💡 Example:
- $250,000 in Bank A = Fully insured
- $250,000 in Bank B = Fully insured
- $500,000 in one account at Bank A = Only $250,000 is insured, the rest is at risk
🚫 Myth #4: FDIC Insurance Covers Investments in Bank-Offered Stocks & Bonds
✅ Reality: Even if a bank offers stocks, bonds, or mutual funds, FDIC does NOT insure them.
Many banks offer investment services, but these funds are not protected by FDIC.
💡 Example:
- If you buy bank stock, and the bank fails, your investment is gone.
- If you hold money in a savings account, that deposit is protected up to FDIC limits.
🚨 Tip: To protect investments, consider SIPC insurance (for brokerage accounts) or choose diversified investments.
🚫 Myth #5: FDIC Insurance Covers Safe Deposit Boxes
✅ Reality: Safe deposit box contents are NOT covered by FDIC insurance.
If a bank is robbed, burned down, or flooded, the FDIC does not reimburse the value of lost items in your safe deposit box.
What Can You Do?
🔹 Get a personal insurance policy (homeowner’s or renter’s insurance)
🔹 Use a fireproof and waterproof home safe for essential items
🔹 Keep digital copies of important documents
💡 Tip: Store cash in a bank account, not in a safe deposit box, to ensure FDIC protection.
🚫 Myth #6: FDIC Insurance Automatically Covers Joint Accounts as Separate Deposits
✅ Reality: Joint accounts have shared insurance limits, not separate ones.
How FDIC Covers Joint Accounts:
Each co-owner is insured up to $250,000 separately.
💡 Example:
👩 Alice & 👨 Bob have a joint account with $500,000 in an FDIC-insured bank.
- Alice’s share: $250,000 (insured)
- Bob’s share: $250,000 (insured)
✔ Total insured = $500,000
🚨 However, if they had $600,000, $100,000 would be uninsured unless they moved it to another bank or ownership category.
🚫 Myth #7: All Banks in the U.S. Are FDIC-Insured
✅ Reality: Not all banks are FDIC-insured—especially online banks and fintech companies.
Some financial institutions operate without FDIC insurance or partner with FDIC-insured banks to offer protection.
How to Check If Your Bank Is FDIC Insured:
🔹 Look for the FDIC logo on their website or branch.
🔹 Use the FDIC’s BankFind Tool (here).
🔹 Call the FDIC at 1-877-ASK-FDIC to confirm.
🚨 Warning: Some neobanks and fintech companies only insure funds through partner banks—always read the fine print!
🚫 Myth #8: FDIC Insurance Costs Money
✅ Reality: FDIC insurance is completely free for depositors!
Banks pay premiums to the FDIC to cover insurance, but customers don’t pay anything extra. If you see a bank charging you for “FDIC coverage,” it’s likely a scam.
💡 Tip: If a bank is charging fees for “deposit insurance,” report them to the FDIC immediately.
📝 Final Thoughts: FDIC Insurance Keeps Your Money Safe—But Know the Limits!
FDIC insurance is one of the strongest protections for depositors, but understanding its limits is crucial.
Key Takeaways:
✅ FDIC insurance covers deposits—NOT stocks, bonds, crypto, or safe deposit boxes.
✅ The coverage limit is $250,000 per depositor, per bank, per category.
✅ You can increase coverage by using multiple banks or ownership categories.
✅ FDIC insurance is free and backed by the U.S. government.
🔍 Want to check if your bank is FDIC insured? Use the FDIC BankFind tool to verify.