With the recent news of a handful of banks failing people are increasingly concerned about the safety of their bank deposits.  How can you know if your money is safe when you deposit it into a bank and if your bank does fail, how much of your money does the FDIC insure?

The FDIC (Federal Deposit Insurance Corporation) is an independent agency of the U.S. Government.  It was created in 1933 to increase people’s confidence in their bank.   It protects you against the loss of your deposits if your FDIC-insured bank or savings association fails.  FDIC insurance is backed by the full faith and credit of the United States government.  That means that the federal government will pay you back the money you have deposited, and any interest you have earned on that money, up to the insurance limit.

Not all banks are FDIC-insured.  You can find out if your bank is by calling toll-free 1-877-275-3342 or using the FDIC’s “Bank Find” online service.

The FDIC insures deposits on four broad types of accounts: individual accounts, joint accounts, revocable trust accounts and retirement accounts.  It does not insure money you invest in stocks, bonds, mutual funds, insurance policies, annuities, and securities even if you purchased these investments through an FDIC-insured bank.

Here’s how FDIC deposit insurance coverage breaks down:

• Individual accounts – these are accounts that are owned by one person only.  The FDIC will insure all of the individual accounts you hold at a single bank up to $250,000 combined.  For example, if you have a checking account, a savings account and money invested in a Certificate of Deposit (CD) at the same bank, $250,000 total of those funds are insured. 
• Joint accounts – these are accounts held by two or more people.  The FDIC will insure up to $500,000 for joint accounts if you and the other account holder(s) have equal rights to withdraw money from the account. For example, if you and your spouse have a joint checking and joint savings account at the same bank your shares of those accounts are added together and insured up to $250,000 per account holder or $500,000 for your joint accounts.   
• Revocable trust accounts – these are deposits made in payable-upon-death (POD) or living trust accounts.  POD accounts are when an accountholder signs an agreement that the deposits will be paid to his/her beneficiaries upon death.  Living or family trusts enable an accountholder to control funds during his/her lifetime and then pay out to beneficiaries upon his/her death.  Both of these types of accounts are insured up to $250,000 per named beneficiary IF:
• The beneficiary is the owner's spouse, child, grandchild, parent, or sibling. Adopted and stepchildren, grandchildren, parents, and siblings also qualify. In-laws, grandparents, great-grandchildren, cousins, nieces and nephews, friends, organizations (including charities), and trusts do not qualify.
• The account title must indicate the existence of the trust relationship by including a term such as payable on death, in trust for, trust, living trust, family trust, or an acronym such as POD or ITF.
• For POD accounts, each beneficiary must be identified by name in the bank's account records.
• Retirement accounts -- lastly, up to $500,000 of money you have deposited in retirement accounts held solely in your name is insured by the FDIC.  All retirement account deposits that you hold at one bank are added together and the total amount insured is $500,000.  There are only four types of retirement accounts insured by the FDIC:

1. Individual Retirement Accounts (IRAs) including traditional and Roth IRAs, Simplified Employee Pension (SEP) IRAs, and Savings Incentive Match Plans for Employees (SIMPLE) IRAs. 
2. Section 457 deferred compensation plan accounts
3. Self-directed (i.e. 401(k) plans) defined contribution plan accounts
4. Self-directed Keogh plan accounts

You can calculate your FDIC deposit insurance by using the FDIC’s online Electronic Deposit Insurance Estimator.

For more information on how the FDIC insures deposits call the FDIC toll-free at 1-877-ASK-FDIC (1-877-275-3342) between 8 a.m. – 8 p.m. EST Monday through Friday or TTY 1-800-925-4618.  You can also send questions directly to the FDIC through their online Customer Assistance Form or send written mail to:

Federal Deposit Insurance Corporation
Attn: Deposit Insurance Outreach
550 17th Street, NW
Washington, D.C.  20429-9990

If your FDIC-insured bank has failed the federal government will typically “seize” the bank, find a buyer for the bank (i.e. another financial institution) and re-open quickly, usually the next business day.  If a buyer is found quickly – and that does happen in the majority of cases – you will have uninterrupted access to your funds by using your ATM, debit card or writing checks against your account.  If a buyer for the bank is not found prior to the next business day the FDIC will continue to seek a buyer while it oversees normal operations of the bank. Ultimately if a buyer is not found and the bank is closed, the FDIC will mail you a check for your insured deposits and a final statement.  Your ATM and debit cards will no longer work and any checks that you have written that have not been cashed against your account prior to the bank closing may “bounce” and you will need to make other arrangements with the person or business to whom you wrote the check.

If your bank has failed you can use the FDIC’s online tool to verify whether or not your account deposits are fully insured or if you need to contact the FDIC.  You will need to have your account numbers readily available if you call the office.  If you have less than $250,000 in individual accounts and/or less than $500,000 in retirement accounts you do not need to complete any paperwork.  If you have more than $250,000 in individual accounts and/or $500,000 in retirement accounts you may need to complete paperwork and file a claim with the FDIC. You can call the FDIC Call Center at 1-866-806-5919 to learn more about completing and filing a claim for potentially uninsured deposits.

If you have a loan from a failed bank, continue to make your loan payments on time, in full and sent to the same address you have been sending payments.  You will continue to receive statements from your bank.