Here are answers to the most common questions about what FDIC insurance is and how it works to keep your money safe.
What is the Federal Deposit Insurance Corporation?
The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the U.S. government that protects bank depositors against the loss of their insured deposits if an FDIC-insured bank or savings association located in the United States fails. Any person or entity can have FDIC insurance coverage on their deposits in an insured bank. A person does not have to be a U.S. citizen or resident to have his or her deposits insured by the FDIC. FDIC insurance is backed by the full faith and credit of the United States government.
What is covered by FDIC deposit insurance?
FDIC insurance covers depositors' accounts at each insured bank, dollar-for-dollar, including principal and any accrued interest through the date of the insured bank's closing, up to the insurance limit.
FDIC insurance covers all types of deposits received at an insured bank, such as:
- Checking accounts (such as Schwab Bank Investor Checking™ accounts)
- Savings accounts (such as Schwab Bank Investor Savings™ accounts)
- Negotiable Order of Withdrawal (NOW) accounts
- Money market deposit accounts (MMDA)
- Time deposits such as Certificates of deposit (CDs) (such as those available through Schwab's CD OneSource® marketplace)
- Bank Sweep Feature—If the cash feature in effect for your Schwab brokerage account is the Bank Sweep Feature, your uninvested cash balances are automatically swept to one or more Program Banks where it is eligible for FDIC insurance
- Cashier's checks, money orders, and other official items issued by a bank
What financial products are not insured by the FDIC?
FDIC insurance does not cover non-deposit investments or investment products, even if they were purchased at an insured bank. These include:
- Stock investments
- Bond investments
- Municipal securities
- Mutual funds (including money market funds)
- Life insurance policies
- Safe deposit boxes or their contents
- U.S. Treasury bills, bonds or notes
- Exchange traded funds
- Cash held in Schwab One® Interest Feature
How is FDIC insurance coverage determined?
The standard deposit insurance amount is $250,000 per depositor, per insured bank, for each account ownership category at a bank. All deposits a depositor has in the same ownership category at each insured bank are added together and insured up to $250,000. Funds deposited in separate branches of the same insured bank are not separately insured.
The FDIC provides separate insurance coverage for deposits held in different categories of legal ownership. The FDIC refers to these different categories as "ownership categories." This means that depositors may qualify for more than $250,000 in insurance coverage if they have funds deposited in different ownership categories and all FDIC requirements for each ownership category are met. The different ownership categories include:
- Single accounts owned by one person
- Joint accounts owned by two or more people
- Certain retirement accounts such as IRAs and self-directed contribution plans
- Revocable trust accounts
- Irrevocable trust accounts (this category will be combined with revocable trust accounts in April 2024)
- Employee benefit plan accounts
- Corporation/partnership/unincorporated association accounts
- Government accounts
So, for example, a single depositor can be eligible for $250,000 of coverage for funds held at a specific FDIC-insured bank in a single account, plus $250,000 held at that same bank in a joint account, plus $250,000 held at that same bank in a retirement account such as an IRA, for a total of $750,000 of coverage.
How can I calculate my FDIC insurance coverage?
Because the deposit insurance rules are complex, you may want to 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.
Examples of FDIC insurance coverage:
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 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).
Example 3: If you have $250,000 in a Schwab Bank Investor Checking account held in just your name, plus $500,000 in a joint Schwab Bank Investor Checking account owned by you and one other person (meaning your ownership of that $500,000 is $250,000), plus a retirement account such as an IRA which has a swept cash balance of $250,000 at Schwab Bank, then FDIC insurance would cover a total of $750,000 for you, plus the $250,000 owned by the other owner of your joint account.