For The Safety of Your Money, Be Sure Your Certificates of Deposit are FDIC Insured

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When you put your hard earned money in a Certificate of Deposit, usually known as a CD, make sure that not only are you getting a CD with the best interest rate, but also if your bank fails or merges with an other institution, your money is secure. You can do that by making certain that your account is FDIC insured and follows the FDIC guidelines.

Why the FDIC was established

Congress, as part of the Banking Act of 1933, originally established the Federal Deposit Insurance Corporation, or FDIC. This act was passed due to the banking crisis that occurred after the stock market crash of 1929. From that time until the act went into effect 6,139 banks had ceased operations.

Since there was no system of insurance, depositors in failed banks were losing money, causing confidence in the banking system to wane. This in turn led other savers to withdraw large amounts of money from banks, contributing to even more failures.

FDIC insurance limits

The amount of account insurance, financed by premiums paid by member banks, was initially set at $2,500 per account. Due to rising levels of economic activity and changing economic circumstances that amount has been increased several times. The last time it was raised, to $250,000 per individual account, was in October 2008, in response to the financial crisis.

The FDIC’s success

This insurance program has been so successful, that to date not a single saver has lost a single dollar in an FDIC insured account, even though bank failures and mergers have taken place since the program’s inception. Even as recently as 2008, FDIC insurance, which was raised – first temporarily, then permanently - during the financial crisis, helped to stabilize the banking system.

Types of bank accounts that qualify for FDIC insurance

First, keep in mind that the FDIC only covers bank accounts such as checking, savings and Certificates of Deposit. You may purchase other products through your bank, such as mutual funds, annuities or life insurance, but FDIC coverage does not apply to them. This also pertains to other securities such as United States Treasuries, which are not FDIC insured but are guaranteed by the full faith and credit of the United States.

FDIC insurance is per individual account

The FDIC has strict rules that cover how much insurance coverage it provides per account. If the amount of money in your CD or other bank account goes beyond those limits, the excess could be at risk should the bank fail.

FDIC account ownership guidelines

To be fully insured, make sure that your deposit follows FDIC guidelines and limits. These guidelines are based on different account ownership categories, with up to $250,000 of coverage allowed for each category of account ownership you have in one bank, not by how many accounts you have in that bank.

The account ownership categories are:

Single Accounts

A single account is a deposit held in one person’s name only or held in account for one person only.

Certain Retirement Accounts

This includes Traditional IRAs, Roth IRAs, SEP-IRAs, SIMPLE IRAs and self-directed defined contribution plans

Joint Accounts

A joint account is a deposit owned by two or more people.

Revocable Trust Accounts

In general, the owner of a revocable trust account is insured up to $250,000 for each unique beneficiary.

Irrevocable Trust Accounts

Irrevocable trust accounts are held in connection with a trust in which the owner gives up all power to cancel or change the trust.

Employee Benefit Plan Accounts

These are a deposit of a pension plan, defined benefit plan or other employee benefit plan that is not self-directed.

Corporation/Partnership/Unincorporated Association Accounts

Deposits owned by corporations, partnerships, and unincorporated associations, including for-profit and not-for-profit organizations.

Government Accounts (also called Public Unit accounts)

The United States, including federal agencies

  • Any state, county, municipality (or a political subdivision of any state, county, or municipality), the District of Columbia, Puerto Rico and other government possessions and territories
  • An Indian tribe

For complete guidelines for each type of account, please check

Deposits exceeding the $250,000 FDIC limit may still be eligible

You can keep up to $250,000 in an individually owned account in one bank and qualify for insurance. But if you were to have more than that amount in one bank in an individually owned account, you would not be insured above the $250,000 limit. To have FDIC insurance for the total amount, you would have to split your deposit among two or more banks.

However, for example, a husband and wife could each have an individually owned single account of up to $250,000 in one bank, so that in total they would be insured up to $500,000. Even that amount could be exceeded if it is held in a different ownership category, such as a common joint account, and again each would covered as a co-owner up to $250,000 (also to a total of $500,000).

Different account ownership at one bank

You may also exceed the $250,000 limit in one bank and still meet FDIC guidelines if you have other accounts that are in different account ownership forms, listed above, such as joint accounts or certain retirement accounts.

Rest assured that any Certificate of Deposit listed on is FDIC insured. Going to will help you get find the CD with the highest interest rate and the FDIC insurance coverage you need, as long as you follow the guidelines.

Credit Unions also offer Certificates of Deposit (they often call them time deposits) that are ordinarily insured by the NCUA, an organization providing similar, although not identifical coverage, to the FDIC. While all banks listed on are insured by the FDIC, please note that not all credit unions listed on are insured by the NCUA (this information can be found on the credit union's information page).

Sanford Ellowitz
Sanford Ellowitz: Sanford Ellowitz is a Certified Financial Planner, a Certified Employee Benefit Specialist and Independent Insurance Agent. He also has an MBA in Finance and Marketing and has been in the financial services and insurance industries for over 25. His expertise includes financial and insurance planning, marketing and product development.

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Today's Highest Online CD Rates

Bank Product Term Interest Rate (APY)
Northern Bank Direct 1-Year 5.60% APY with $500 minimum
Finworth, a division of InsBank 1-Year 5.38% APY with $50,000 minimum
TotalDirect, a division of City National Bank of Florida 1-Year 5.35% APY with $25,000 minimum
Dollar Savings Direct, a division of Emigrant Bank 3-Year 5.00% APY with $1,000 minimum
First Internet Bank of Indiana 3-Year 4.66% APY with $1,000 minimum
IncredibleBank 3-Year 4.58% APY with $1,000 minimum
First Internet Bank of Indiana 5-Year 4.55% APY with $1,000 minimum
BMO Alto, a division of Bank of Montreal Harris 5-Year 4.50% APY with no minimum
Department of Commerce 5-Year 4.34% APY with $500 minimum

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