FDIC Insurance: Is Your Money Covered?

By Hightower Great Lakes on July 18, 2024

What is FDIC Insurance?

The Federal Deposit Insurance Corporation (FDIC) is an independent federal agency that insures deposits in U.S. banks in the event of a bank failure. It was created in 1933 to maintain public confidence and stability in the financial system through the promotion of sound banking practices.¹

Am I Protected by the FDIC?

The FDIC insures deposits up to $250,000 per depositor as long as the banking institution is a member firm. You can find out if your bank is a member by asking a representative or calling the FDIC at 877-275-3342 (1-877-ASKFDIC) or using their BankFind tool. Most banks also have signs that indicate their member status if they have a physical location. 

The FDIC covers checking and savings account, CDs (certificates of deposit), money market accounts, IRAs, revocable and irrevocable trusts, and employee benefit plans.

Generally, the FDIC does not cover annuities, life insurance policies, stocks, and bonds. The FDIC has this helpful interactive tool to help you check whether your assets are covered.

If you bank at a credit union, you are likely protected by the National Credit Union Share Insurance Fund (NCUSIF). The NCUSIF is regulated by the National Credit Union Administration (NCUA) and also insures individual deposits up to $250,000.

FDIC insurance limits insurance coverage of deposits up to $250,000, per person, per bank, per account type in the case that a bank fails. If depositors want to increase their insurance, they can open accounts at multiple banks or open multiple types of accounts (individual, joint, IRA, etc).

There are also some online platforms that will split your savings among multiple banks to allow you to increase your insurance.

Effective April 1, 2024, revocable trusts are now insured up to $250k per beneficiary (up to five beneficiaries). This reduces the insurance amount for some trust bank accounts as they used to have unlimited coverage through loopholes in the regulation. Per FDIC, the changes are intended to streamline the coverage rules and make them easier for both bankers and customers to understand. The maximum insured amount for a trust is now $1.25 million per trust owner per insured depository institution.⁵

Real World Examples

The primary driver of the FDIC is to prevent run on the bank scenarios, which exacerbated the devastation of the Great Depression. When depositors hear about the threat of bank closure, it can cause them to panic and pull their money, creating a cascading effect that ends up with real world consequences even if the threat started off only as a rumor. Eventually, the bank will be unable to continue to support withdrawal requests and customers could lose their entire savings overnight.

Before 1933, there was no guarantee of the safety of one’s deposits beyond confidence in the banking institution’s stability.

You may remember the March 2023 failure of Silicon Valley Bank in Santa Clara, California, which required the FDIC to step to protect depositors. The FDIC transferred all of the deposits and assets the bank held to Silicon Valley Bridge Bank, National Association (N.A.), a fill service bank that was operated by the FDIC.⁴

What Happens If Your Bank Fails

In the event your bank fails, you can file a claim with the FDIC as early as the day after it folds. You can submit the request online through the FDIC’s website. You can also call their number to receive personalized assistance at no cost to you.

Unfortunately, when disaster strikes you can count on scammers to try and take advantage of the situation. If you receive any communication claiming to be from the FDIC, be vigilant. The FDIC as well as your former bank will not request any personal information from you in relation to getting your deposit restored to you. Instead, they will direct you to the FDIC’s secure web portal.⁴

If you’re unsure if your money is fully protected by the FDIC and want to discuss the matter further, please contact us to set up a call or meeting.

Hightower Great Lakes is a group comprised of investment professionals registered with Hightower Advisors, LLC, an SEC registered investment adviser. Some investment professionals may also be registered with Hightower Securities, LLC, member FINRA and SIPC. Advisory services are offered through Hightower Advisors, LLC. Securities are offered through Hightower Securities, LLC. This is not an offer to buy or sell securities. No investment process is free of risk, and there is no guarantee that the investment process or the investment opportunities referenced herein will be profitable.

performance is neither indicative nor a guarantee of future results. The investment opportunities referenced herein may not be suitable for all investors. All data or other information referenced herein is from sources believed to be reliable. Any opinions, news, research, analyses, prices, or other data or information contained in this presentation is provided as general market commentary and does not constitute investment advice.

Hightower Great Lakes and Hightower Advisors, LLC or any of its affiliates make no representations or warranties express or implied as to the accuracy or completeness of the information or for statements or errors or omissions, or results obtained from the use of this information. Hightower Great Lakes and Hightower Advisors, LLC assume no liability for any action made or taken in reliance on or relating in any way to this information. The information is provided as of the date referenced in the document. Such data and other information are subject to change without notice. This document was created for informational purposes only; the opinions expressed herein are solely those of the author(s) and do not represent those of Hightower Advisors, LLC, or any of its affiliates.

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¹ Source: Nerd Wallet. “What Is FDIC Insurance and What Are the Coverage Limits?” As of July 10, 2024.

² Source: Yahoo Finance. “The FDIC change that leaves wealthy bank depositors with less protection.” As of July 10, 2024.

³ Source: Investopedia. “Federal Deposit Insurance Corp. (FDIC): Definition & Limits.” As of July 10, 2024.

⁴ Source: The Federal Deposit Insurance Corporation. “Failed Bank Information for Silicon Valley Bank, Santa Clara, CA.” As of July 10, 2024.