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
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.
Why is it safer to keep your money in a bank? ›
A bank account is typically the safest place for your cash, since banks can be insured by the Federal Deposit Insurance Corp. up to $250,000 per depositor, per insured institution, per ownership category. Banks that are insured by the FDIC often say “Member FDIC” on their websites.
How is your money safe in a bank? ›
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 do you save money in the bank? ›
One of the main advantages of saving at a bank is the growth of your funds. Banks provide interest or returns on your savings balance. The bank's interest will help increase your savings' value over time. The bigger and longer you save, the bigger the profit you get.
Why is your money safer in a bank account than stored at home? ›
Money that isn't in a deposit account isn't protected by FDIC insurance, so if it's stolen or lost in a natural disaster, it can't be replaced. Plus, keeping your funds in a deposit account ensures that they are earning interest on your behalf.
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.
Is my money 100 safe in a bank? ›
As long as the financial institution is insured by the FDIC or NCUA, the money you put into a deposit account at a bank or credit union is insured for up to $250,000 per depositor, per bank. If the bank collapses or fails, you can still get your money back within a few days of the bank's closure.
Do we keep money in a bank for safety? ›
Money in the bank might not feel safe as it used to. But there are moves you can make to increase the safety of your funds. First, only keep your money with institutions insured by the FDIC or NCUA.
What are two ways banks keep your money safe? ›
Both SIPC and FDIC insurance protect your assets in the event of a failure at member institutions. The biggest difference is that FDIC coverage protects your bank deposits and assets, while SIPC coverage protects your securities with a brokerage firm.
What is the safe of a bank? ›
Modern bank vaults typically contain many safe deposit boxes, as well as places for teller cash drawers and other valuable assets of the bank or its customers. They are also common in other buildings where valuables are kept such as post offices, grand hotels, rare book libraries and certain government ministries.
Why? Because putting your money in an FDIC-insured bank account can offer you financial safety, easy access to your funds, savings from check-cashing fees, and overall financial peace of mind.
What are the benefits of keeping money safe? ›
Long-Term Security
The future is unpredictable, and financial emergencies can crop up anytime. Saving money allows you to create a safety net for your future expenses as well as unplanned financial needs. The more you save, the more peace of mind you have, as you are better prepared for anything life throws at you.
Is it OK to save money in bank? ›
A regular savings account is "liquid." That is, your money is safe and you can access it at any time without a penalty and with no risk of a loss of your principal. In return, you get a small amount of interest. Check rates online as they vary greatly among banks.
Why is money safe in a bank? ›
Most deposits in banks are insured dollar-for-dollar by the Federal Deposit Insurance Corp. This insurance covers your principal and any interest you're owed through the date of your bank's default up to $250,000 in combined total balances.
What do banks do to protect your money? ›
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.
What is the safest bank right now? ›
Among the safest US banks, according to Global Finance's November 2022 rankings, are AgriBank, US Bank, CoBank, AgFirst Bank, and Farm Credit Bank of Texas, primarily for those in the agricultural sector.
Why keeping money in bank is better than cash? ›
While having cash on hand is important for liquidity, keeping that money in a business bank account provides additional levels of safety and security. Even small amounts of cash in your business premises exposes you to an increased risk of theft, burglary, fire, or even misappropriation.
Why is it better to save money in a bank instead of keeping it at home? ›
The risks of keeping cash at home
You don't have FDIC insurance: When you deposit money in an FDIC-insured bank, you can take comfort knowing that your deposits will be protected and reimbursed up to $250,000 if the bank fails. For credit unions, insurance is provided by the National Credit Union Administration (NCUA).
Where is the safest place to keep your money? ›
Here are some low-risk options.
- Checking accounts. If you put your savings in a checking account, you'll be able to get to it easily. ...
- Savings accounts. ...
- Money market accounts. ...
- Certificates of deposit. ...
- Fixed rate annuities. ...
- Series I and EE savings bonds. ...
- Treasury securities. ...
- Municipal bonds.
