What Is FDIC Insurance and How Does It Protect Your Cash?
FDIC insurance might not be the flashiest topic in finance, but when markets get rocky or headlines stir up fear, knowing how your cash is protected suddenly matters, a lot.
At Sandbox, we often hear questions like:
- “Am I fully insured?”
- “Is my joint account covered?”
- “What happens if my bank fails?”
Whether you're managing an inheritance, selling a business, or just want peace of mind, understanding FDIC insurance is a simple way to safeguard your wealth. Let’s break it down.
What is FDIC insurance?
FDIC insurance is protection for your deposits, plain and simple. The Federal Deposit Insurance Corporation (FDIC) is a government agency that insures your money at member banks in the event the bank fails.
If you have a checking, savings, or CD account at an FDIC-insured bank, your funds are automatically protected up to certain limits. This insurance covers both your principal and any interest you’ve earned, dollar-for-dollar, up to the applicable coverage amount.
What types of accounts are covered?
FDIC insurance applies to most standard deposit accounts, including:
- Checking accounts
- Savings accounts
- Money market deposit accounts (MMDAs)
- Certificates of deposit (CDs)
- Cashier’s checks, money orders, and official items issued by the bank
Noteworthy: FDIC insurance does not cover stocks, bonds, mutual funds, ETFs, annuities, or crypto, even if you purchased them at a bank.
What are the FDIC insurance limits?
The general limit is $250,000 per depositor, per insured bank, per ownership category. That last part, ownership category, is key.
Here’s what that means in practice:
- A single account (just you) is insured up to $250,000.
- A joint account (you + someone else) is insured up to $250,000 per co-owner.
- A trust account or IRA may be insured separately, depending on how it's set up.
So, if you and your spouse have a joint savings account with $500,000 and each of you also has a separate account with $250,000, you could be covered for up to $1 million at the same bank.
How can I get more than $250,000 in FDIC coverage?
Many people assume they need to spread money across several banks to stay protected. While that’s one option, there are other strategies to increase coverage without moving your cash all over town, including:
- Using different ownership types: Open accounts under different categories—joint, individual, trust, and retirement—to layer protections.
- Adding beneficiaries: Each named beneficiary on a revocable trust account can add an additional $250,000 in coverage.
- Using a brokerage CD program: These allow you to buy CDs from multiple banks, all through one account—potentially insuring millions.
If you’re unsure how your accounts stack up, try the FDIC’s EDIE Calculator or ask your financial advisor to review your setup.
Is my bank FDIC insured?
Most U.S. banks are, but not all. You can check using the FDIC BankFind tool or ask your advisor. Credit unions are insured by the NCUA, which works similarly to the FDIC.
Why does FDIC insurance matter now?
In times of uncertainty, whether it’s economic volatility, regional bank issues, or big life events like selling a business or receiving an inheritance, FDIC insurance is your safety net. Knowing your cash is protected allows you to move forward with clarity and confidence.
Need help reviewing your cash protection strategy?
At Sandbox Financial Partners, we help individuals and families simplify their finances and make smart decisions about their money, including where it’s held, how it’s insured, and how it fits into your broader financial plan.