What is FDIC Insurance?

If you bank with an institution that's protected by the Federal Deposit Insurance Corporation (FDIC), the government protects the money in your accounts with FDIC insurance. In the event the bank fails, the FDIC will reimburse you to a certain limit, so you don't have to worry about losing your money through no fault of your own.

Citizens is an insured member of the FDIC. This means that deposits across all Citizens accounts – including those under different brands like Citizens and Citizens Access – are insured in total up to $250,000 per depositor, per ownership category, per insured bank.

Here's what you need to know about FDIC insurance and how it keeps your money safe.

What is FDIC insurance?

Congress established the FDIC in 1933 to strengthen the banking system and protect consumers and their savings. The FDIC insures all deposits placed in its member banks and savings associations. Any time an insured financial institution isn't able to operate, the FDIC guarantees that the bank's customers will have their deposits covered. In short, the FDIC insures your bank deposits so you can be assured your money is always protected.

The FDIC is an independent agency of the U.S. government, which supports it. To be FDIC-insured, financial institutions pay regular insurance premiums. Most banks today are insured, but you can look up all FDIC-insured institutions directly on the FDIC website.

What does FDIC insurance cover and not cover?

The FDIC insures all deposit accounts held with an FDIC member bank. This covers checking accounts, savings accounts, money market deposit accounts, certificates of deposit (CDs), cashier's checks, money orders and other official bank deposit products.

Anything that is not a deposit entrusted to the bank in exchange for some type of credit issuance is not insured by the FDIC, even if the bank offers the product. This includes all securities and investment products, such as stocks, bonds, mutual funds and municipal and Treasury items (bills, bonds and notes). It also doesn't include cryptocurrency, the contents of safe deposit boxes, life insurance or annuities.

If you're unsure whether an account type is covered, the FDIC website has detailed information about what's covered and what's not.

How much does the FDIC insure?

The FDIC insures up to $250,000 per person for each account ownership category at a member institution. Account ownership categories include single accounts, joint accounts, certain retirement accounts, trust accounts, employee benefit plan accounts, business accounts and government accounts. The FDIC website provides an in-depth summary of what each ownership category means and what requirements must be met:

Could you be insured for over $250,000 at the same bank?

Yes, if you have multiple accounts in different ownership categories at the bank. For example, say you have $250,000 in a savings account you own by yourself, another $200,000 in a joint checking account with your spouse, and $150,000 in a qualifying retirement account. Since each of these accounts is in a different ownership category, you have $250,000 of FDIC coverage for each one. In this example, your entire $600,000 at the bank is insured because it's spread across three accounts with different ownership types. The same would be true if these accounts were each held at different banks.

The key thing to understand is that coverage is not "per account" but "per account ownership category" and "per institution." So, for instance, say you, by yourself and at one bank, have $200,000 in a money market account, $100,000 in another savings account and $100,000 in a checking account. These all fall into the single account category, so only $250,000 of this $400,000 is insured. In this situation, you might consider moving at least $150,000 of this money either to a different account ownership category or to an account at a different institution so that you have maximum FDIC protection.

Want to know how much coverage you have? Check out the FDIC's Electronic Deposit Insurance Estimator (EDIE) and calculate coverage based on your personal situation.

What does the FDIC do when a bank fails?

In the unlikely event that a bank finds itself in financial trouble, the FDIC steps in to take control and safeguard customers' accounts. Within days, they either safely establish a new account at another financial institution or pay customers directly for the insured balance of their account.

The FDIC has not lost a penny of insured funds since opening its doors in 1933. The FDIC also actively monitors and examines banks to make sure they're financially sound and healthy and ensures that they comply with consumer protection laws.

What happens to bank stock when the FDIC takes over?

If a bank is in bad enough financial trouble for the FDIC to step in, it likely is going bankrupt. In this case, the bank's stock will become worthless. The FDIC's priority will be ensuring the depositors get their money back. Stockholders could try making a claim against the bank's remaining assets after it fully reimburses depositors. However, the FDIC notes that stockholders usually get little to no money back in these situations.

How do I know if my bank is FDIC-insured?

Banks with FDIC insurance typically post signs in their physical locations announcing they have coverage. They also usually indicate it somewhere on their website's homepage along with an explanation of FDIC insurance limits.

You can also use the FDIC's online BankFind tool to find out if an institution has coverage, or you can call the FDIC's hotline at (877) 275-3342.

Most banks have FDIC insurance, but if you're unsure it's best to double-check rather than risk your money being unprotected.

FDIC insurance FAQs

Are credit unions insured by the FDIC?

No, credit unions are not insured by the FDIC. The FDIC only covers banks. Instead, credit unions receive insurance from the National Credit Union Administration (NCUA). The NCUA offers protection similar to the FDIC, up to $250,000 per account per ownership type per institution. This ensures credit union deposit accounts are just as safe as bank accounts.

Do beneficiaries of accounts get FDIC insurance?

Yes, beneficiaries who inherit bank deposit accounts get FDIC insurance. When the owner of a deposit account dies, a beneficiary has six months to move the bank funds into their account. During this time, the FDIC insurance remains the same as it would if the original owner were alive. Once the beneficiaries move the money to their bank accounts, they have their own FDIC insurance.

Beneficiaries of trust funds also get FDIC insurance. The rules depend on the type of trust and the number of beneficiaries for the fund.

Are 401(k)s and IRAs insured by the FDIC?

They are insured by the FDIC only so far as there are bank deposit holdings within the retirement account. For example, if you use your IRA to put your retirement money in a CD or a money market account that's held by the IRA, you'll have FDIC insurance for those accounts. However, you will not receive FDIC insurance for any investments in your 401(k) or IRA, like stocks, bonds and mutual funds.

How long does the FDIC have to reimburse your money?

Federal law doesn't set a time limit for the FDIC to reimburse depositors other than that it should do so as soon as possible. Historically, the FDIC has aimed to reimburse depositors within two business days and often returns the money within one business day.

We're ready to protect your accounts

FDIC insurance is a vital part of the modern banking system. By working with an FDIC-insured bank, you can rest easy knowing your money is fully protected up to the coverage limits. If you have more than $250,000 in any one account ownership category, consider adjusting so your account spread fits the FDIC rules, and all your money is properly insured.

Thinking about opening a new checking account? Learn more about how Citizens can help you reach your financial goals.