When you deposit money into a bank, you expect it to be safe and protected. That’s where FDIC insurance comes in. The Federal Deposit Insurance Corporation (FDIC) is a government agency that insures deposits at FDIC-insured banks, ensuring that even if a bank fails, depositors don’t lose their money—at least up to a certain limit.
But FDIC insurance doesn’t cover everything. Many people assume all their financial assets are insured, only to find out later that some of their funds aren’t protected under FDIC rules. So, what exactly does FDIC insurance cover, and what doesn’t it protect? Let’s break it down.
✅ What FDIC Insurance Covers
FDIC insurance primarily protects deposits in bank accounts, up to a limit of $250,000 per depositor, per bank, per ownership category. This coverage ensures that even if a bank collapses, insured funds will be returned to depositors—typically within a few days.
🔹 FDIC Insurance Covers the Following:
| Account Type | Covered? |
|---|---|
| Checking Accounts | ✅ Yes |
| Savings Accounts | ✅ Yes |
| Money Market Deposit Accounts (MMDAs) | ✅ Yes |
| Certificates of Deposit (CDs) | ✅ Yes |
| Negotiable Order of Withdrawal (NOW) Accounts | ✅ Yes |
| Cashier’s Checks and Money Orders (issued by an FDIC bank) | ✅ Yes |
💡 Example:
If you have $200,000 in a savings account and $50,000 in a checking account at the same FDIC-insured bank, your total deposits ($250,000) are fully covered.
🚨 But if you had $300,000 in a single account, only $250,000 would be insured—meaning you’d risk losing the extra $50,000 if the bank failed.
🚫 What FDIC Insurance Does NOT Cover
While FDIC insurance is a great safety net, it does NOT cover all financial products. Many people assume their entire investment portfolio is protected, but that’s not the case.
❌ FDIC Does NOT Cover the Following:
| Financial Product | Covered? |
|---|---|
| Stocks, Bonds, Mutual Funds | ❌ No |
| Cryptocurrency (Bitcoin, Ethereum, etc.) | ❌ No |
| Life Insurance Policies | ❌ No |
| Annuities | ❌ No |
| Municipal Bonds & Treasury Securities | ❌ No |
| Safe Deposit Box Contents | ❌ No |
| Peer-to-Peer Payment Apps (Venmo, PayPal, Cash App) | ❌ No |
💡 Example:
If you invest $50,000 in a mutual fund at your bank, FDIC insurance does NOT protect it. If the bank fails, your investment could still be lost.
🚨 Even if your bank offers investment services, those assets are not FDIC-insured.
📌 Does FDIC Insurance Cover Safe Deposit Boxes?
No. The FDIC does not insure cash, jewelry, or documents stored in a safe deposit box. If your bank is robbed or destroyed in a fire, the bank may not reimburse your losses.
✅ Tip: To protect valuables, consider a separate insurance policy for items in a safe deposit box.
📲 Does FDIC Insurance Cover Money in Payment Apps (Venmo, PayPal, Cash App)?
No. Money held in Venmo, PayPal, or Cash App is NOT FDIC-insured unless it is stored in an FDIC-insured bank account within the app.
✅ Tip: If you use these apps, regularly transfer money to your FDIC-insured bank account for added protection.
🏦 How to Maximize FDIC Insurance Coverage
If you have more than $250,000 in deposits, you can take steps to increase your FDIC coverage:
✔ Open Accounts at Different Banks – FDIC insurance applies per bank, so spreading deposits across multiple banks increases coverage.
✔ Use Different Account Ownership Types – FDIC insurance applies separately to:
- Individual accounts
- Joint accounts
- Trust accounts
- Retirement accounts
💡 Example:
- You have $250,000 in an individual account at Bank A → ✅ Fully insured.
- You have $250,000 in a joint account (with your spouse) at the same bank → ✅ Fully insured.
- You open another $250,000 account at Bank B → ✅ Fully insured.
- Your total FDIC-insured amount = $750,000 (spread across different categories).
🚨 What Happens If Your Bank Fails?
If an FDIC-insured bank fails:
🔹 You don’t have to file a claim—the FDIC automatically steps in.
🔹 Your insured funds are usually returned within a few business days.
🔹 If your deposits exceed FDIC limits, you could lose any uninsured portion.
💡 Tip: If your deposits exceed $250,000 per category, per bank, consider spreading your funds across multiple banks for full coverage.
🔑 Key Takeaways
✔ FDIC insurance protects deposits (checking, savings, CDs, and money market deposit accounts) up to $250,000 per depositor, per bank, per ownership category.
✔ FDIC does NOT cover stocks, bonds, mutual funds, cryptocurrency, safe deposit box contents, or payment apps like Venmo.
✔ If a bank fails, insured deposits are returned—typically within days.
✔ To increase FDIC protection, use multiple banks or different account categories.
📢 Final Thought: FDIC insurance is one of the strongest financial protections in the U.S., but it’s important to understand its limits. If you want to make sure your money is fully protected, double-check how your funds are allocated and adjust your accounts if needed.