What to Do if You Have More Than $250,000 in the Bank

How Do FDIC Insurance Limits Work?

The FDIC insures funds up to $250,000 per account holder, insured bank and ownership category. Let's unpack this in plain English.

What's Covered Under FDIC Insurance?

FDIC insurance covers the following accounts:

• Checking accounts
• Savings accounts
• Money market accounts
• Certificates of deposit (CDs)
• Negotiable order of withdrawal (NOW) accounts
• Cashier's checks or money orders issued by the bank

What Isn't Covered?

None of the following types of accounts are covered:

• Stock and bond investments
• Mutual funds
• Life insurance policies
• Annuities
• Municipal securities
• Safe deposit boxes (and their contents)
• Treasury bills, bonds and notes
• Cryptocurrency wallets and exchanges

It's also important to note that funds held with non-bank financial services, such as payment apps like Venmo, PayPal or Cash App, may not be FDIC-insured.

What's an Insured Bank?

The FDIC insures deposits at participating banks and thrifts. The majority of U.S. banks are FDIC-insured, but check with your bank or prospective bank—or search the FDIC database—if you aren't sure.

What Are FDIC Ownership Categories?

The FDIC recognizes the following account ownership categories:

• Single accounts
• Joint accounts
• Certain retirement accounts
• Trust accounts
• Employee benefit plan accounts
• Corporation/partnership/unincorporated association accounts
• Government accounts

Let's review an example of how multiple ownership categories might work.

Your account balances are as follows:

• $5,000 in an individual checking account
• $10,000 in individual savings
• $200,000 in individual CDs
• $100,000 in a money market account you hold in a revocable trust

In total, you have $315,000 in account balances that are entirely covered under FDIC insurance. That's because your money is split between two account ownership types—individual (single) and revocable trust. By maintaining accounts in multiple ownership categories, you are able to keep your holdings insured at a single bank despite the $250,000 limit.

Note: Having different types of accounts within the same ownership category doesn't extend coverage. In the above example, you have checking, savings and CDs, but since you're the sole owner of all three, your single account total is $215,000. If your money market account was held on an individual basis instead of a trust, your total assets in the bank would exceed the $250,000 limit. In this case, a portion of your savings would be at risk if the bank were to fail.

How to Insure Bank Deposits Over $250,000

As the example above shows, you can get more than $250,000 in FDIC coverage, but you may have to be strategic about it. Here are a few options to consider.

Open an Account at a Different Bank

FDIC coverage limits apply per bank. Opening an account at a new bank—even if it's the same type of account—and moving some of your funds there can help you bring your deposits below FDIC limits and ensure that all of your funds are covered. Rinse and repeat if necessary.

Add a Joint Account Owner

If you add your spouse, partner or family member to your individual account, your FDIC coverage jumps from $250,000 to $500,000, as coverage is per account owner.

Split Funds Between Ownership Categories

Adding a joint owner also puts your joint account into a new ownership category. If you also have individual accounts, they are insured up to $250,000 collectively, while your joint account is insured up to $500,000 ($250,000 each for you and your co-owner).

If you or your co-owner have multiple joint accounts, the balances will be added together and insured up to $250,000 for each of you.

Use a Network Bank

Some banks partner together to form reciprocal deposit networks, where deposits to one financial institution can be split among multiple institutions to increase FDIC coverage. The idea works like this: If your deposit is held among 10 different banks, your FDIC coverage limit increases 10 times to $2.5 million.

Tip: If you need help sorting through your FDIC coverage, talk to your bank. They can explain your current coverage and may be able to help you find ways to keep your funds covered if you're near or above deposit limits. You can also try using the FDIC's Electronic Deposit Insurance Estimator to see how your deposits are insured.

Learn more: Ways to Make Money With Your Savings

What Are Alternatives to FDIC Coverage?

Relying on FDIC coverage isn't your only option. Here are a few bank alternatives, plus an additional insurance option that could extend your current bank's coverage above the $250,000 level.

Find a Credit Union

Not-for-profit credit unions offer many of the same types of accounts that banks do, often with better-than-average interest rates and lower fees. Their deposits are insured through the National Credit Union Association (NCUA), with rules and coverage limits that are similar to what you might find from the FDIC.

You'll need to meet certain requirements to join a credit union, but it's relatively easy to find a credit union you can join.

Open a Cash Management Account

Cash management accounts are similar to checking accounts, but they're typically offered by investment firms. Instead of housing your funds at a single bank, your money is spread across multiple banks, multiplying your FDIC coverage.

Cash management accounts typically pay interest and allow check writing and/or debit card transactions, making them a versatile alternative to regular checking or savings accounts.

Be aware: Moving some of your money into investments could help you avoid having too much money in the bank—and could potentially earn you a higher return over time—but your investment earnings are not insured with a brokerage.

Frequently Asked Questions

Are You Covered?

On balance, having more than $250,000 in the bank is a good problem to have. Spreading the wealth between financial institutions, considering alternative ownership categories or looking for additional insurance through reciprocal deposits or private insurance can all help keep your funds covered in the unlikely event that your bank fails.

Even if your funds are not approaching the $250,000 limit, you may want to review the coverage at your bank, credit union or brokerage firm to ensure you aren't at risk and to set your mind at ease.