Deposit Insurance

Deposit insurance repays depositors up to a set amount if a bank fails. Each country sets its own limit, and up to that limit the government effectively guarantees the money.

It exists to prevent bank runs. Rumours that a bank is in trouble send everyone to withdraw at once, which brings down even sound banks. With protection in place, there is no reason to rush.

The limit is calculated per person per bank. Multiple accounts at the same bank are combined under one person, so splitting accounts does not raise the limit — splitting across banks does.

Many products are not covered. Funds, shares, bonds and some insurance products carry no principal guarantee. Being sold at a bank does not mean being protected.

If a large sum sits at one bank, the limit is worth checking. Spreading across banks secures protection at each, and that much inconvenience is worth accepting.