Deposit Insurance: How Much Is Protected
- •Even if a bank fails, deposits are protected up to a per-person limit
- •Principal plus interest, counted separately at each bank
- •Investments like funds and stocks are not deposit-insured
How much is safe?
If a bank fails, a government-backed fund repays deposits up to a set limit. In the U.S., FDIC insurance covers up to $250,000 per depositor, per bank.
How is it counted?
Your balance plus accrued interest is added up and compared to the limit. Multiple accounts at the same bank are combined per person. So amounts far above the limit at one bank may not be protected.
Covered vs not
| Type | Examples |
|---|---|
| Covered (deposits) | Checking, savings, CDs |
| Not covered (investments) | Funds, stocks, bonds |
Common myths
- “Money in a bank is always fully safe” → Amounts above the limit may not be protected.
- “I bought the fund at a bank, so it's covered” → Investments aren't deposit-insured, even if bought at a bank.
- “Keep it all at one bank for simplicity” → Well above the limit? Splitting across banks is safer.
Frequently Asked Questions
What about money over the limit?
Spread it across several banks—each bank's coverage applies separately. For large sums, splitting is the safe move.
Is interest protected too?
Principal and interest together are covered up to the limit—though it may be a standard rate of interest rather than every promised cent.
Are stocks in my brokerage protected?
That's separate from deposit insurance. Price losses on stocks/funds aren't covered; if a broker fails, other rules keep client assets segregated.
Are spouses covered separately?
Yes—the limit is per person, so different account holders are covered separately. Joint accounts may be counted differently by system.
Are savings banks covered?
If the institution participates in the deposit insurance system, the same limit applies. Check that it's insured before opening an account.