Maximizing Your FDIC Coverage
By Shari Kruzinski | Published: March 2023
As a result of recent events in the banking and finance industry, the Federal Deposit Insurance Corporation (FDIC) and its coverage limits on banking customer deposits have been top of mind for many people.
Many banking customers have questions about FDIC limits and whether their money is protected. It is important to understand how FDIC insurance affects your financial health and how you can be proactive to ensure your money is safe.
You may have heard or be concerned that you are only insured up to $250,000, and while that is technically true, there are many ways to increase FDIC coverage without the hassle of moving from bank to bank. Here’s what you need to know about FDIC insurance and how you can maximize your coverage.
FDIC insurance is designed to enable consumers to place their money at FDIC-insured banks across the United States, with the peace of mind their money is backed by the Federal government. Consumers do not need to apply for FDIC insurance coverage, as it is automatic if the account is opened at an FDIC-insured financial institution.
Accounts that are FDIC-insured include checking, savings, money markets, certificates of deposit (CDs), cashier’s checks, and some pre-paid cards (if certain requirements are met). Some retirement accounts, like IRAs and certain 401(k) rollovers/transfers, are also covered.
FDIC insurance covers accounts in the same ownership category at the same financial institution, up to $250,000. These limits do not apply to each account. Account categories include, but are not limited to:
- Single Accounts – owned by one person with no beneficiaries. Coverage = $250,000 per owner.
- Joint Accounts – owned by two or more people with no beneficiaries. Coverage = $250,000 per co-owner ($500,000 total coverage if owned by two co-owners).
- Revocable Trust Accounts – owned by one or more people that identify one or more beneficiaries. All revocable trust accounts owned by the same person at the same bank are added together. Coverage = $250,000 per beneficiary.
- Business Accounts – insured for $250,000. Business coverage is limited to single ownership under the same EIN number.
In all, there are 14 FDIC insurance ownership categories. An individual can increase their coverage by simply adding additional ownership categories. The best way to assess your deposit accounts and determine how to organize them to maximize your FDIC coverage is to thoroughly review your accounts with your bank.
How to Calculate Your Coverage
The FDIC provides a great tool for determining your coverage, the Electronic Deposit Insurance Estimator (EDIE) calculator. Using this calculator, you can enter your deposit account information at any insured bank and generate a report showing what funds are insured and what funds (if any) are uninsured. The calculator can be found at: https://edie.fdic.gov/calculator.html.
What Accounts Are Not Insured?
Typically, non-deposit investment products are not covered by FDIC insurance. These financial products include:
- Stock investments.
- Bond investments.
- Mutual funds.
- Crypto assets.
- Life insurance policies.
- Municipal securities.
- Safe deposit boxes or their contents.
- U.S. Treasury bills, bonds or notes (these are not FDIC-insured but are backed by the U.S. government).
Know the facts! For more information about FDIC insurance, visit FDIC.gov or speak with your banker.
About the Author – Shari Kruzinski
Shari Kruzinski is Executive Vice President and Chief Consumer Banking Officer at WSFS Bank. Her career spans more than 30 years in the banking industry, including 31 years with WSFS. In her current position, Shari leads the Consumer Banking division including the Retail network, Small Business banking, WSFS Mortgage, and the Contact Center.