How Can You Insure Deposits Over the FDIC Limit?

The Federal Deposit Insurance Corp. (FDIC) provides coverage for eligible bank accounts up to $250,000, but if you need more than that, there are several ways to obtain it. Your options include joint accounts and a variety of methods that spread your funds out among many banks, ensuring that all of your money is covered.

Businesses often need to keep more than $250,000 on hand, but given the history of major bank collapses, including First Republic Bank, Silicon Valley Bank, and Signature Bank, you’re taking a big risk by exceeding coverage limits with any one account or bank. In those cases, businesses and individuals were fortunate that the federal government stepped in and other banks took over, but those solutions may not always be guaranteed.

Key Takeaways

• FDIC insurance covers each depositor up to $250,000 per bank, per ownership category—but there are ways to get more coverage.
• Adding beneficiaries, opening a joint account, or moving some money over to another bank or credit union are easy ways to protect your funds beyond the standard FDIC coverage.
• Other programs and organizations, like MaxSafe accounts, the IntraFi network, and banks insured by the Deposit Insurance Fund (DIF), can extend your insured amount well beyond the $250,000 limit.

How Much Does the FDIC Insure?

FDIC insurance covers each depositor up to $250,000 per bank, per ownership category. To understand what that means, the first thing to know is that deposit accounts covered by the FDIC include checking accounts, savings accounts, certificates of deposit (CDs), and money market accounts, and those all belong to the same ownership category.

Therefore, if you have a checking account, a savings account, and a CD at one bank and their total balance is $300,000, you’d only be covered for up to $250,000 of those funds, even though they are spread across three accounts.

On the other hand, you could get higher levels of coverage if one of those accounts had a different ownership category, such as a joint savings account with a spouse. Examples of FDIC ownership categories include single accounts, joint accounts (which you share with another account holder), certain retirement accounts, employee benefit plan accounts, trust accounts, business accounts, and government accounts.

Insuring Deposits Over the FDIC Insurance Limit

As the bank closures mentioned above illustrate, keeping more than the FDIC-insured limit at one bank can put your assets in jeopardy. And although there was a remedy for the affected bank account holders, there may not be next time. Here are a few ways to protect sizable funds from potential bank failures.

Open Accounts at Other Banks or Credit Unions

Perhaps the simplest way to protect your money is to spread it out among a number of different banks and credit unions. The downside is that you’ll have more accounts to keep track of, but it can save you the headache of worrying about losing money should one of your banks fall on hard times.

Add a Joint Owner to Your Account

When you add a joint owner to an account, you essentially double your FDIC coverage. And you can even have more than two joint account owners, adding another $250,000 in insurance coverage for each owner. Just be sure you understand what it means to share a joint account with someone—that person has full access to the account, like you do.

Open an Account in a Different Ownership Category

As mentioned, FDIC insurance is applied for accounts by ownership category. So, at a single bank, you could protect $250,000 in an individual account, another $250,000 in a joint account with a family member or business partner, and another $250,000 in an individual retirement account (IRA).

Open a Cash Management Account

A cash management account is a hybrid type of banking, with features similar to checking and savings accounts plus the ability to manage investments. Cash management accounts work with partner banks to “sweep” your money into different accounts to ensure your money is fully insured. Institutions vary as to how much coverage they can provide, with some going up to $1 million or more. 

There may be other types of insurance coverage available beyond FDIC, depending on the type of account you have. For example, with a cash management account, you may also be eligible for coverage from Securities Investor Protection Corp. (SIPC) for a portion of the funds. And credit unions offer similar coverage to the FDIC’s through the National Credit Union Association (NCUA).

Use IntraFi Network Deposits

The IntraFi Network, which was once known as the Certificate of Deposit Account Registry Service, or CDARS, lets people open and manage an account with one bank. But on the back end, their balances are spread out among several CDs or savings accounts at other network FDIC-insured banks. This practice ensures that each portion of customers’ balances remains below the $250,000 FDIC limit.

IntraFi has nearly 3,000 partner banks to help serve high-net-worth individuals, businesses, government entities, nonprofits, credit unions, and any others who want to expand their FDIC coverage.

Open a MaxSafe Account

If you have significant funds, consider opening a MaxSafe Account through Wintrust Community Bank. It’s a special kind of account that offers up to 15 times more insurance coverage than the standard—up to $3.75 million. Wintrust does this by spreading out your deposits across 15 community bank charters.

Open an Account With Both FDIC and DIF Insurance

While the federal government offers FDIC insurance, there is also a private entity called Deposit Insurance Fund that provides coverage for amounts exceeding the $250,000 limit. The catch is that DIF coverage is only available at fewer than 80 banks, and all are located in Massachusetts.

Why Aren’t FDIC Insurance Limits Higher?

The FDIC set the $250,000 limit back in 2006 after making increases up to that amount throughout its history since its establishment in 1934. As for what the future may hold, the FDIC released a report in May 2023 in which options were evaluated. These included leaving the $250,000 as is, extending unlimited deposit insurance coverage to all depositors, or raising it just for business payment accounts.

The FDIC has shown signs of leaning toward the targeted increase for businesses, in light of the danger posed by the bank shutdowns. But any changes to insurance limits will require approval from Congress.

Frequently Asked Questions (FAQs)

What Is the FDIC Limit for a Single Account?

The FDIC limit for a single covered account with no beneficiaries is $250,000.

How Much Does the FDIC Cover With Two Beneficiaries?

If you have a bank account and designate a beneficiary in the event of your death, the account is insured as a revocable trust account. For revocable trust accounts, the FDIC covers up to $250,000 per beneficiary. Therefore, with two beneficiaries the total coverage is $500,000, for three beneficiaries it’s $750,000, and so on.

Does the FDIC Cover Multiple Accounts?

The FDIC insures up to $250,000 per account, per bank, per ownership category. The key here is the ownership category. If you have multiple accounts that fall into the same category (as checking, savings, CDs, and money markets do), the FDIC covers the combined amount of those accounts up to $250,000. However, if any of the accounts have different ownership categories (for example, individual checking accounts and IRAs fall into different categories), then you would be covered up to $250,000 for each account type.

The Bottom Line

When choosing how and where to store your money, it’s important to understand FDIC coverage limits so all of your funds are protected. Being strategic about where you allocate your funds—whether that means spreading cash across different types of accounts or banking institutions, or using the IntraFi Network or a MaxSafe account—can extend your coverage well beyond $250,000. Your ultimate goal is to ensure that you won’t experience any loss should your bank fail.

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