The FDIC—or Federal Deposit Insurance Corporation—is a U.S. federal agency that protects you up to certain limits against the loss of your deposit accounts (such as checking and savings) if your FDIC-Insured bank fails.
The basic FDIC insurance amount for deposit accounts is $250,000 per account holder per insured bank for each ownership type and $250,000 per owner per insured bank for self-directed retirement accounts deposited at an insured bank. These insurance limits include principal and accrued interest.
The FDIC does not insure money invested in stocks, bonds, mutual funds, life insurance policies, annuities, municipal securities, and money market funds, even if these investments were bought from an insured bank.
The FDIC insurance limit applies to each account holder at each bank. Here is how the FDIC defines coverage for different account holders by some common "ownership" types:
- Single accounts. Deposit accounts (e.g., checking, savings) owned by one person. FDIC insurance covers up to $250,000 per owner for all single accounts at each bank.
- Joint accounts. Deposit accounts owned by two or more people. FDIC insurance covers up to $250,000 per owner for all joint accounts at each bank.
- Certain retirement accounts. Accounts such as IRAs and self-directed defined contribution plans1. All such accounts owned by the same person at the same bank are aggregated towards the $250,000 FDIC coverage limit for these types of accounts.
Here is a full list of FDIC Ownership categories.
Use the FDIC's Electronic Deposit Insurance Estimator (EDIE) to calculate your FDIC coverage for FDIC-insured banks where you have deposit accounts.
You can also use the FDIC's estimator for hypothetical situations. For instance, if you would like to see how much of some assets would be covered by FDIC insurance, you can enter bank and account information and get an estimate on how much would be insured.
The following products are eligible for FDIC coverage at Schwab's Affiliated Banks:
- Schwab Bank High Yield Investor Checking® accounts
- Schwab Bank High Yield Investor Savings® accounts
- Bank Sweep Feature—Your Schwab brokerage account includes a feature that pays interest on idle cash. If your account uses the Bank Sweep Feature, your cash balances are automatically swept to one or more Program Banks where it is eligible for FDIC insurance. To see which cash feature you have, log in and go to your Brokerage Account Balances page.
All deposits held at the same FDIC-insured bank in the same ownership capacity (as described in the previous section) are added together to determine your total amount of FDIC insurance coverage at that bank. This rule applies whether you open an account directly at the bank or Schwab brokerage holds the accounts on your behalf. (See Example 2 below.)
Charles Schwab & Co., acting as a deposit broker, can place deposits at FDIC-insured banks on your behalf. In this case, the FDIC insurance available from the bank "passes through" to you. FDIC-insured deposits are available through your Schwab brokerage account for:
- Certificated of Deposit—Through Schwab CD OneSource®, you can buy and track CDs from multiple banks in your Schwab brokerage or retirement accounts. Your deposits at each insured bank are insured separately, whether you open the accounts directly from the bank or the deposits are placed for you through a broker. (See Example 1 below.)
- Bank Sweep Feature— If the cash feature in effect for your Schwab brokerage account is the Bank Sweep Feature, your cash balances are automatically swept to deposit accounts at Program Banks where they are eligible for FDIC insurance. Keep in mind that deposits you hold at a single Program Bank—whether you open an account directly at the bank or Schwab brokerage holds the accounts on your behalf—are added together with other deposits you hold at that same bank in the same ownership capacity in order to determine the total amount of FDIC insurance coverage for your deposits.
The following investments do not receive FDIC coverage through your Schwab brokerage account:
- Mutual funds
- Life insurance policies
- Municipal securities
- Money market funds
- Cash held in Schwab One® Interest Feature
Example 1: If you have a Schwab brokerage account, in just your name, with two $250,000 CDs from two different banks, and you have no other deposits at those banks, your CDs would be covered for a total of $500,000 ($250,000 at each bank). However, if those two CDs are from the same bank, then FDIC insurance would cover a total of only $250,000 (leaving $250,000 of these CDs uninsured by the FDIC).
Example 2: If you have a Schwab Bank High Yield Investor Checking account, in just your name, with $200,000 and a Schwab brokerage (non-retirement) account with Bank Sweep Feature, in just your name, that has swept cash balances of $75,000 into deposits at Schwab Bank, then FDIC insurance would cover a total of $250,000 (leaving $25,000 of these deposits uninsured by the FDIC).
Calculating deposit insurance can be complex, especially if you have multiple accounts registered in the same ownership capacity.
For more information, use the FDIC's Electronic Deposit Insurance Estimator (EDIE) to estimate your total coverage at a particular bank.
For more information about FDIC-insured products available through Schwab's Affiliated Banks or your Schwab brokerage account, contact us.