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FDIC Insurance

The FDIC—or Federal Deposit Insurance Corporation—is a U.S. federal agency that protects you against the loss of your deposit accounts (such as checking and savings) if your FDIC-Insured bank fails.

The basic FDIC insurance amount is $250,000 per account holder per insured bank for deposit accounts and $250,000 for certain retirement accounts deposited at an insured bank1. 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 plans. FDIC insurance covers up to $250,000 for all deposits in such retirement accounts at each bank.
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 receive FDIC coverage at Schwab Bank:
All deposits in your Schwab Bank checking account, savings account, and Bank Sweep Feature are added together to determine your total amount of FDIC insurance coverage at Schwab Bank (per account holder "ownership" type, as described in the previous section). 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 deposits at Schwab Bank and are FDIC-insured. Keep in mind that all deposits you hold at Schwab Bank—whether you open an account directly at the bank or Schwab brokerage holds the accounts on your behalf—are added together 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:
  • Stocks
  • Bonds
  • Mutual funds
  • Life insurance policies
  • Annuities
  • 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. 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 covers both for 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 or multiple ownerships.

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 Bank or your Schwab brokerage account, contact us.

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