Is My FDIC Bank Deposit Insured?

Are Your Bank Deposits Safe?

The recent scare in the consumer banking sector raises the question: How safe is your money really…even at a respected financial institution?

Let’s get something out of the way: A bank account that’s covered by the Federal Deposit Insurance Corporation (FDIC) is a safe place to put your money. In fact, exactly $0 of FDIC-insured deposits have been lost since its inception in 1933. The turmoil at Silicon Valley Bank (SVB) has been a reminder of the value (and limitations) of that insurance—more than 85% of the bank’s deposits were uninsured because (in many cases) they were above the maximum limit.

Which accounts qualify for protection? Customer deposits at FDIC-insured banks up to $250,000 per individual, per bank—or $250,000 each for the co-owners of a joint account—are insured. Checking accounts, savings accounts, revocable and irrevocable trusts, money market accounts (note that this is different than a money market fund) and certificates of deposit (CDs) all qualify for coverage. The FDIC also provides coverage for deposit accounts held within a traditional or Roth IRA at an FDIC-insured financial institution, although not all IRA accounts fall into this category.

The FDIC doesn’t cover annuities or investment products such as stocks, bonds and money market funds. It also doesn’t protect against fraud or identity theft. (Click here to see a table of what’s covered and the guidelines for each account type.)

Think of it like this: The FDIC functions like any other insurance policy in your financial plan. You hope you’ll never need it, but it becomes incredibly important in certain unlikely circumstances—like a bank run.

The Federal Reserve, FDIC and U.S. Treasury announced that they would cover all deposits at SVB and Signature Bank to prevent further economic damage. Can we assume they will do the same the next time a bank fails? While it’s possible, we would not recommend holding above the FDIC limit at any one insured bank. Every situation is different and there is no guarantee that the actions taken over the weekend will be repeated in the future.

Check here to make sure that your bank is FDIC insured and consider diversifying your cash holdings across multiple banks if they total more than $250,000 per account owner. Please don’t hesitate to contact us for assistance or advice—our firm has extensive experience managing through periods of crisis. We will be able to answer your questions about how your FDIC bank deposit is insured and the safety of your cash accounts.


Video Transcript

Hi, I’m Andrew Busa, Manager of Financial Planning, with Today’s Adviser Takeaway.

The Silicon Valley Bank failure begs the question, how safe is your money really, even at a mainstream financial institution?

FDIC insurance seems to matter more now than it ever has. And with that, it’s important to understand how FDIC insurance works, what it covers, what it doesn’t, and a few simple best practices for you to follow.

Now, let’s get something out of the way right at the beginning here, an FDIC insured bank is a safe place to put your money. The recent turmoil in SVB does not change that, and the reason we know that is because exactly $0 of insured deposits have been lost at an FDIC insured institution. Now, think of it like this in many ways FDIC functions like other insurance policies, as part of your financial plan.

You hope that you never need to rely on it, but in case you do, it becomes incredibly important. So, the FDIC will insure up to $250,000 per individual, per institution and per ownership category. Now, ownership category simply refers to who owns the account.

The common distinction here would be between a single or a jointly owned account. For example, a joint account at an FDIC insured institution would receive coverage up to $500,000. And FDIC covers things like checking accounts, savings accounts, money market accounts, that is different from a money market fund, and CDs.

It doesn’t cover annuities or investment products, like money market funds.So, that’s a distinction there between money market account and a money market fund. It also doesn’t protect against identity theft or fraud. So, what’s the bottom line to all this?

Number one, make sure that your bank is an FDIC insured institution and there’s a handy tool at that you can use to look up your bank. Number two, consider diversifying your cash positions across multiple banks if they total more than $250,000 and are singly owned.

And number three, most importantly, get in touch with us if you have questions about your specific situation. We are absolutely happy to help you out.

And that’s it for today, thanks for watching!

Additional Silicon Valley Bank Resources

For informational purposes only; not a recommendation to buy, hold or sell any investment product. Past performance is not an indication of future returns. Speak with a financial advisor before taking specific action. Tax, legal and insurance information contained herein is general in nature, is provided for informational purposes only and should not be construed as legal or tax advice. Personalized tax advice and tax return preparation is available through a separate, written engagement agreement with Adviser Investments Tax Solutions. Always consult a professional regarding your specific situation.