Placing your money in a federally-insured and highly regulated bank ensures that your hard-earned funds are protected and available when you need them.
Alternatives to a bank account, like keeping your money at home, places you at risk of losing your cash to burglary, theft, fire, floods, or other potential disasters. Plus, if you hide it somewhere, there’s always a chance you may forget where you put it, and you’ll never earn a dime on it.
When you use a bank account:
- Your money can be insured against loss up to $250,000 and many banks offer products that can provide additional protection
- Your money can gain interest, depending on the type of account you set up
- Your money is protected from unauthorized electronic transactions carried out, for example, by someone who has stolen your identity
- You can use banking services to conveniently transfer money
- You can take advantage of electronic bill pay services to efficiently pay bills instead of mailing payments
- You may use alerts and other tools to help you track your money, keep an eye on your spending habits and improve your budget
What is FDIC insurance?
The Federal Deposit Insurance Corporation (FDIC) is a federal agency that protects bank depositors against insured deposit losses when FDIC-insured banks close.The FDIC insures up to $250,000 per depositor per FDIC-insured bank. In the nearly 90-year history of the FDIC, no depositor has ever lost a penny of an insured deposit due to a bank closure.
Do I need to apply for FDIC insurance when I open a bank account?
No. Bank customers do not need to do anything; it’s automatically applied to any FDIC-insured bank deposit account. View the FDIC's Deposit Insurance resource.
How can I check if my financial institution is FDIC-insured?
FDIC-insured banks will have the FDIC logo at teller stations or posted at bank entrances. Look for “Member FDIC.” You may also check using the FDIC’s BankFind online tool to search for your institution. Alternatively, you can also contact the FDIC directly at 1-877-275-3342 and submit a request.
Are all bank products covered by the FDIC?
No. Deposits held in checking accounts, savings accounts, money market accounts, and certificates of deposits (CDs) are covered. Annuities, bonds, crypto assets, life insurance, mutual funds, safe deposit box contents, and stocks are not covered. For more information, check out the FDIC’s resource on “Are My Accounts Insured By the FDIC?”
Are there ways to protect my funds beyond $250,000?
Many banks offer a range of products and account options that can provide additional protection for your funds. Ask your bank if any of those products might be right for you.
Does FDIC insurance apply to online banks?
Yes, it does so long as they are member FDIC banks. FDIC insurance is not limited to brick-and-mortar banks.
What happens when FDIC-insured banks close?
The FDIC works to ensure that your insured deposits - up to $250,000 - are covered and available for you. The FDIC may take any of the following approaches to address the situation:
- Pay depositors
- Manage the bank and set up a “bridge bank” to assume the deposits and obligations of closed banks.
- Sell it to another bank.
Regardless of the strategy the FDIC uses, you can rest assured that you will be able to access your insured deposits.
Where can I learn more?
FAQs
The FDIC insures up to $250,000 per depositor per FDIC-insured bank. In the nearly 90-year history of the FDIC, no depositor has ever lost a penny of an insured deposit due to a bank closure.
Why is it safer to keep your money in a bank? ›
As long as your deposit accounts are at banks or credit unions that are federally insured and your balances are within the insurance limits, your money is safe. Banks are a reliable place to keep your money protected from theft, loss and natural disasters. Cash is usually safer in a bank than it is outside of a bank.
How is your money safe in a bank? ›
The FDIC insures your bank account to protect your money in the unlikely event of a bank failure. Bank accounts are insured by the Federal Deposit Insurance Corporation (FDIC), which is part of the federal government. The insurance covers accounts containing $250,000 or less under the same owner or owners.
Why is it good to save money in the bank? ›
Saving in a bank is a very important step in managing personal finances. By saving at a bank, you can prepare for various needs in the future, such as the need for marriage, education, buying/building/renovating a house, to emergency fund needs.
What's the #1 reason to keep your money in an insured financial institution? ›
you at risk of theft, fire, flood, loss, or damage. Opening an account at an FDIC-insured bank anywhere across the nation ensures that your money is protected in the event of disaster. In addition, when you open an account in an FDIC-insured bank, your money is safe in the unlikely event that the bank fails.
Why is it better to place your money in a bank instead of hiding your money under the mattress? ›
In fact, banks are safer than keeping a large amount of cash in your wallet or under your mattress. That's because banks have security systems and technologies to protect your money against theft and fraud. Protection from fire, flood or theft. Cash can be stolen, damaged or destroyed.
Where is the safest place to keep your money? ›
Generally, the safest places to save money include a savings account, certificate of deposit (CD) or government securities like treasury bonds and bills. Understanding your savings and investment options can help you decide the best place to park your savings.
What are 3 advantages of saving money? ›
Here are some of the main benefits of saving money:
- It helps in emergencies. Emergencies are always unexpected. ...
- Cushions against sudden job loss. You may have a good job now, but what if you were to lose that job? ...
- Helps finance those big-ticket items and major life events. ...
- Limits debt. ...
- Helps prepare for retirement.
But cash offers other important functions and benefits:
- It ensures your freedom and autonomy. ...
- It's legal tender. ...
- It ensures your privacy. ...
- It's inclusive. ...
- It helps you keep track of your expenses. ...
- It's fast. ...
- It's secure. ...
- It's a store of value.
Key Takeaways. Savings accounts are a safe place to keep your money because all deposits made by consumers are guaranteed by the FDIC for bank accounts or the NCUA for credit union accounts. Certificates of deposit (CDs) issued by banks and credit unions also carry deposit insurance.
For the most part, if you keep your money at an institution that's FDIC-insured, your money is safe — at least up to $250,000 in accounts at the failing institution. You're guaranteed that $250,000, and if the bank is acquired, even amounts over the limit may be smoothly transferred to the new bank.
Is my money safe if the bank fails? ›
The Bottom Line
As long as you do business with an FDIC-insured institution and keep less than $250,000 per account ownership category, your funds will be safe if your bank fails. However, you might face some minor inconveniences, such as waiting for a new debit card or updating your automatic payments.
How do you know a bank is safe? ›
Banks that are insured by the FDIC usually make it known that they offer this benefit in promotional materials and by displaying the FDIC logo prominently, but to be safe, you can use the FDIC's BankFind tool to verify if a bank is insured — and for what amount.
Is it better to keep your money or put it in a bank? ›
Security: Money kept in a bank is much safer than keeping it at home. Banks are heavily regulated, and they have systems in place to protect your money. 2. Interest: Bank savings accounts give you the potential to earn interest on your money, which can help you grow your savings over time.
Is it better to keep money in the bank or at home? ›
It's a good idea to keep a small sum of cash at home in case of an emergency. However, the bulk of your savings is better off in a savings account because of the deposit protections and interest-earning opportunities that financial institutions offer.
Why should we keep money in a bank and not at home? ›
Helps you grow your money
Most banks offer interest when you deposit money in a savings account. It is usually between 4-6%, but you can also choose to invest it in other investment options, both within the same bank (such as a fixed deposit or recurring deposit) or otherwise (such as investing in mutual funds).
