DayCents

FDIC Insurance

FDIC insurance protects the money in your bank accounts — up to $250,000 per depositor, per bank, per ownership category — if the bank fails. It's automatic at member banks and backed by the U.S. government, which is why insured deposits are considered risk-free.

The limit is $250,000 per depositor, per insured bank, per ownership category — and the last clause is the one that matters for larger balances. A single account and a joint account at the same bank are separate categories, so a couple can hold considerably more than $250,000 at one institution and remain fully covered. Credit unions provide identical coverage through the NCUA. What is not covered is the important part: stocks, bonds, mutual funds and money market funds are not insured even when bought through a bank's own brokerage, and the similarity between a money market account (a deposit, insured) and a money market fund (an investment, not) catches people out. Coverage is automatic and needs no application.