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6 best ways to FDIC-insure your excess bank deposits

Cassidy Horton
Updated
6 best ways to insure excess bank deposits (twomeows via Getty Images)

If you keep more than $250,000 at any one bank, you might worry about whether your money is fully protected by government insurance. Maybe you sold a house or a business, adjusted your portfolio for retirement or received an inheritance. Regardless of how you got the money, if your deposits exceed the insurance limits of the Federal Deposit Insurance Corporation, you’re at risk of losing some of it if your bank were to fail.

Here are six ways you can extend FDIC insurance to protect your bank deposits of more than $250,000 and keep your money safe.

🔍 What is the Federal Deposit Insurance Corporation?

The FDIC is an independent agency of the U.S. government that insures savings accounts, certificates of deposit, money market accounts and other deposit accounts for up to $250,000 as a way to protect consumers against bank failure. This deposit insurance covers your principal and any earned interest up to the maximum per person, per bank and per account ownership category.

Credit union deposits are overseen by the National Credit Union Administration, which covers up to $250,000 per credit union, per member-owner and per account ownership category.

The first way to make sure your deposits of more than $250,000 are covered is to move the excess money into a new account at a different bank. The FDIC insures up to $250,000 per person, per bank. So, if your deposits total $500,000, you can split the amount into $250,000 at one bank and the rest at another. This way, all of your money is fully insured.

The key here is that they must be different banks, and not different divisions of the same bank. For instance, Bask Bank is the online division of Texas Capital Bank, which means its deposits are FDIC insured by Texas Capital. If you already have $250,000 in a Texas Capital savings account, opening a Bask Bank savings account won’t provide separate FDIC insurance coverage, since both fall under the same limit.

💡Expert tip: When shopping for a new bank, verify which FDIC member bank insures the deposits. You can find this in the small print near the bottom of the bank’s website, including whether it's a division or partnership with another brand.

Dig deeper: Can you lose money in a savings account? It’s unlikely — but here’s what to watch out for

If you want to keep all your money in one bank, you may be able to insure deposits of more than $250,000 by opening different account types.

The FDIC offers separate deposit insurance for different account ownership categories. The most common of these categories are single accounts, joint accounts and certain retirement accounts, but they also include business accounts, trust accounts and other categories. Each category is insured separately for up to $250,000 per person.

Here are two scenarios illustrating how that might work across different ownership categories:

  • If you have $250,000 in a single account and $250,000 in an IRA at the same bank, the full $500,000 total would be covered by FDIC insurance because the accounts fall into different types.

  • If you hold a single account, a joint account and an IRA at the same bank, each account would be insured separately — for up to $750,000 in total coverage.

If you have more than $250,000 on deposit, talk to your bank to confirm how it categorizes your open accounts and whether you need to take action to avoid risk.

Joint accounts are a useful option for couples or business partners, because the FDIC treats each joint account holder as a distinct person in the context of deposit insurance. With joint owners, each person is allowed $250,000 in FDIC coverage, for a total of $500,000 per joint account. And it doesn't matter if one person puts in more money than the other.

In addition to your joint accounts, you can keep a separate personal account at the same bank too. Each account is insured separately by the FDIC or NCUA, which means you’d have $500,000 in coverage for the joint account, $250,000 for one person’s single account and $250,000 for the other person’s account.

A lesser-known way to insure more than $250,000 at a single bank is by depositing your money through the IntraFi Network, a network of financial institutions designed to safeguard your deposits.

When you place a deposit through the IntraFi Network, your money is divided into smaller amounts and distributed across multiple big-name and community banks in the network. Each bank holds a portion of your deposit, ensuring your entire sum is fully insured.

But here’s the best part: Instead of juggling multiple accounts at different banks, you'll still work with just one institution, receive just one monthly statement and have access to your funds through that one account.

IntraFi’s network boasts nearly a third of all commercial banks in the U.S. For example, the online-only bank UFB Direct uses the IntraFi network to help its customers insure deposits up to $225 million. You can find out if your bank offers IntraFi Network services by talking to customer support or by searching the IntraFi Network site for participating institutions.

Cash management accounts look like high-yield bank accounts on the surface, but they’re offered through brokerage firms instead of banks.

Because these brokerage firms aren’t insured by the FDIC, they use a network of partner banks to insure deposits. Similar to the IntraFi Network, these brokerage firms sweep your money into accounts with several partner banks to extend the standard $250,000 in FDIC insurance and cover your total investment.

Here’s an example of popular cash management accounts and their maximum FDIC insurance coverage limits.

Cash management accounts are a useful option if you already use or plan to use a brokerage firm for investing. They easily integrate with your existing investment accounts, so you can transfer money seamlessly among them. Plus, cash management accounts usually come with minimal fees and higher interest rates that beat many traditional bank accounts.

The Depositors Insurance Fund (DIF) is a private insurance fund that provides extra deposit insurance coverage for participating Massachusetts-chartered savings banks.

This coverage is separate from and in addition to the standard FDIC coverage, and you can use both to insure deposits of more than $250,000. Whatever the FDIC doesn’t cover is insured by the DIF. Note that DIF insurance is available only to Massachusetts-chartered savings banks that have opted into the program. Look for “member DIF” on the bank’s site or search the DIF site for your bank.

🔍 How common is bank failure in the United States?

Despite the spate of headlines around bank failures in March 2023, banking crises and bank failures are relatively uncommon. There have been 567 bank failures since 2001, according to the FDIC, with the bulk of them — 507 bank failures, or nearly 90% of all failures in this time period — clustered from 2008 to 2014 during what's now called the Great Recession.

The FDIC and NCUA insure deposits up to $250,000 "per depositor, per bank and per ownership category." But what does this mean, exactly?

  • Per depositor means that the insurance limit applies to each person who has money in the bank. So if you have an account in your name only, you are considered a single depositor.

  • Per bank means the insurance limit applies to each bank separately. So if you have $250,000 in Bank A and another $250,000 in Bank B, both amounts are fully insured. However, if you keep $500,000 in a single bank, only $250,000 of that money may be insured, depending on the ownership category of your accounts.

  • Per ownership category refers to the different types of accounts you can have at a bank. The FDIC provides separate insurance coverage for different ownership categories.
    The per-ownership category rule means you could technically keep more than $250,000 at the same bank if it’s spread across multiple account types. For instance, you could keep up to $250,000 in a savings or checking account that’s just in your name and then another $250,000 in a joint account with a partner for full coverage.

  • Single accounts — owned by one person

  • Joint accounts — owned by two or more people

  • Certain retirement accounts — such as IRAs and self-directed contribution plans

  • Trust accounts — deposits held by one or more owners under an informal revocable trust, such as a payable-on-death (POD) or in-trust-for (ITF) account

  • Employee benefit plan accounts — pensions, defined benefit plans or other employee benefit plans

  • Corporation, partnership or unincorporated association plans — includes for-profit and not-for-profit organizations, LLCs and professional corporations

Depending on how extensively you bank, it may not be readily clear to you how much of your account balances are protected by government insurance. To help, the FDIC offers EDIE — its Electronic Deposit Insurance Estimator that you can use to check your current FDIC coverage.

With this online tool, you enter your bank’s name and add your individual account types and current balances. EDIE then generates a report telling you if any of the money in those accounts exceeds FDIC limits.

Still wondering how to insure deposits of more than $250K? Learn more about deposit safety and government insurance designed to protect your deposits.

There is no one “safest way” to deposit more than $250,000 into a bank. You can use any of the methods we’ve included based on whichever feels best for you.

If opening an account at another bank is easiest, go that route. Or if it’s easier to open an account jointly with someone else — and you fully trust that person — that may be an easy option too.

The FDIC does not insure most investments, including stocks, bonds, mutual funds or cryptocurrency. U.S. Treasury bills, bonds and notes are also excluded, though they’re backed by the “full faith and credit of the U.S. government” — which is a pledge from the government that it will fulfill payment obligations.

Accounts that aren’t covered by FDIC insurance will include statements disclosing the product is not a deposit account or insured by the Federal Deposit Insurance Corporation.

It’s not a good idea to keep more than $250,000 in a single bank account if there’s just one person listed as the account owner. This is because you’ll exceed FDIC limits — meaning any amount over $250,000 could be at risk if the bank were to fail.

If you have a joint account, you can keep up to $500,000 in a single bank account, because the $250,000 limit applies to each of you. Of course, if you have a cash management account or DIF coverage, your limits might be higher. Learn more about how much you should keep in a savings account.

You and other insured depositors wouldn’t need to do anything. In the unlikely event of a bank failure — or a closure as a result of the bank finding itself unable to meet its obligations to its customers — the event itself would trigger the bank’s chartering authority to call in the FDIC, which would work to identify all protected depositors and debts.

The FDIC would notify you in writing and make actions public through meetings and notices. See the FDIC's Information and Support Center for information on submitting questions, concerns and complaints.

Yes, joint accounts are FDIC-insured up to $500,000. Each joint owner gets $250,000 in FDIC coverage for a total of $500,000. This coverage is separate from any individual accounts both of you may own at the same bank.

Cassidy Horton is a finance writer who specializes in banking, insurance, lending and paying down debt. Her expertise has been featured in NerdWallet, Forbes Advisor, MarketWatch, CNN Underscored, USA Today, Money, The Balance and Consumer Affairs, among other top financial publications. Cassidy first became interested in personal finance after paying off $18,000 in debt in 10 months of graduation with an MBA. Today, she's committed to empowering people to stand up and take charge of their financial futures.

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