FDIC Insurance

The primary reason why money held at a bank is considered safe is because of the Federal Deposit Insurance Corporation (FDIC) insurance. The FDIC is a U.S. government agency that protects bank deposits by law.

FDIC insurance protects deposits up to $250,000 per person, per bank, and per account ownership category (e.g., a single account vs. a joint account vs. a retirement account are all separate categories).

For example, if you have $5,000 in a checking account and the bank fails, the FDIC steps in, takes control of the bank, and ensures you regain access to your money, usually within a few days.

Any cash you keep in physical form is vulnerable to theft, fire, or natural disasters. There is no dedicated insurance for physical cash, and it cannot be recovered once it is lost or destroyed.

Accounts covered by FDIC include checking accounts, savings accounts, money market deposit accounts (MMDAs), and certificates of deposit (CDs). However, FDIC does not cover:

• Investments such as stocks or mutual funds
• Cryptocurrency holdings in crypto exchanges
• Money sitting in payment apps until transferred to an FDIC-insured bank