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Federal Deposit Insurance Corp. insurance coverage is particularly relevant now, in light of the 2023 banking crisis involving the failures of several institutions: Silicon Valley Bank, Signature Bank and First Republic Bank. The FDIC insures up to $250,000 per depositor, per institution and per ownership category at member banks. But what can you do if you've got more than $250,000 in the bank? Here are eight solutions for insuring all your money.
» Read about bank runs, what happens when a bank fails and what to do when there's a bank-run panic
1. Open an account at a different bank
Perhaps the most straightforward way to get another $250,000 insured is to open an account at a second FDIC member bank. If you're using accounts that earn interest at a bank with only FDIC insurance, be sure your deposits are low enough that your balance with interest will be within the $250,000 limit. Once an account reaches the $250,000 limit, you can open another new account at another institution.
SoFi Checking and Savings
APY
4.60%
Min. balance for APY
$0
Learn More
Member FDIC
CIT Bank Platinum Savings
Min. balance for APY
$5,000
Learn More
Deposits are FDIC Insured
BMO Alto Online Savings Account
APY
5.10%
Min. balance for APY
$0
2. Add a joint owner
Single, individually owned accounts are insured up to $250,000 total at FDIC member banks. However, joint accounts — with two or more owners — are insured up to $500,000 total. So to double the insured amount in deposit accounts at a single bank, you can add another owner.
» Considering a co-owner? Find out how and when joint bank accounts work
3. Get an account that's in a different ownership category
FDIC insurance coverage applies to several ownership categories:
Single accounts (owned by one person).
Joint accounts (owned by more than one person).
Certain retirement accounts, including IRAs.
Corporation, partnership and unincorporated association accounts.
Employee benefit plan accounts.
Government accounts.
The ownership category refers to who owns the account — such as a single or joint account — and the account type. So, for example, you could still safely have up to $250,000 total across checking, certificates of deposit, savings, and money market accounts in a "single account" ownership category and put another $250,000 in a qualifying individual retirement account, which falls under the ownership category of "certain retirement accounts."
» Need more details? Learn about FDIC insurance ownership categories
4. Join a credit union
Similar to the FDIC, the National Credit Union Share Insurance Fund insures up to $250,000 per person, per institution, per ownership category at credit unions that have National Credit Union Administration membership. Any credit union offering this coverage must show that it's insured in its advertising and display the official NCUSIF sign at its branches. To open an account at a credit union, you need to be a member. Credit unions sometimes limit membership by region or employers, but some of the best credit unions have easier qualifications to join.
5. Use IntraFi Network Deposits
The IntraFi Network Deposits program allows you to get FDIC insurance on millions of dollars through a network of financial institutions without having to open accounts at multiple banks. Instead, you can keep all your money at one bank, and as long as that bank is part of the IntraFi Network, the program will funnel your money into deposit accounts of your choice at other network banks.
6. Open a cash management account
A cash management account is an account that has features similar to checking, savings and/or investment accounts. Depending on the CMA, your account may offer a debit card, check writing abilities and earn interest, among other benefits. Nonbank financial service providers tend to offer CMAs, but the FDIC insures the cash balance of a CMA, with some institutions offering coverage for up to $2 million total. They're able to do this as members of the IntraFi Network Deposits program.
» Ready to open one of these hybrid accounts? See our list of the best cash management accounts
7. Put your money in a MaxSafe account
A MaxSafe account maximizes FDIC insurance coverage by offering protection for balances of $250,000 up to $3.75 million total per person. Wintrust, the company that offers MaxSafe accounts, provides this level of protection by distributing deposits across more than a dozen community bank charters, similar to how the IntraFi Network works. MaxSafe accounts include CDs, money market accounts and IRAs.
8. Opt for an account with both FDIC and DIF insurance
The Depositors Insurance Fund, or DIF, is a private insurance fund that insures deposit amounts at member banks beyond what the FDIC covers — without a limit. About 70 banks offer DIF coverage, and all are based in Massachusetts.
FDIC insurance has limitations, but you have several options to insure a greater amount.
As a financial expert with a demonstrated depth of knowledge in banking and financial instruments, let's delve into the concepts mentioned in the provided article about insuring money in the face of a banking crisis. My expertise is rooted in both theoretical understanding and practical experience, providing a comprehensive grasp of the intricacies of financial products and regulations.
Now, let's break down the key concepts introduced in the article:
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Federal Deposit Insurance Corp. (FDIC) Coverage:
- The FDIC insures deposits at member banks up to $250,000 per depositor, per institution, and per ownership category.
- The insurance becomes crucial during banking crises to protect depositors from losses in case of bank failures.
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Bank Failures in 2023:
- The article mentions a banking crisis in 2023 involving the failures of Silicon Valley Bank, Signature Bank, and First Republic Bank.
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Options for Ensuring Funds Beyond $250,000:
- Open an Account at a Different Bank: Opening an account at a second FDIC member bank allows an additional $250,000 in insurance.
- Add a Joint Owner: Joint accounts with two or more owners are insured up to $500,000, providing a way to double the insured amount.
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FDIC Ownership Categories:
- FDIC insurance applies to various ownership categories, including single accounts, joint accounts, retirement accounts, revocable and irrevocable trust accounts, corporate accounts, and more.
- Different ownership categories allow for diversification of funds while staying within the FDIC insurance limits.
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Credit Union Option:
- Credit unions, like banks, offer insurance through the National Credit Union Share Insurance Fund, providing coverage up to $250,000 per person, per institution, and per ownership category.
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IntraFi Network Deposits:
- This program allows individuals to get FDIC insurance on large sums of money by distributing it across a network of financial institutions without the need to open multiple accounts.
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Cash Management Accounts (CMA):
- CMAs, offered by nonbank financial service providers, combine features of checking, savings, and investment accounts.
- FDIC insures the cash balance of a CMA, with coverage sometimes extending up to $2 million through participation in the IntraFi Network Deposits program.
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MaxSafe Account:
- Wintrust's MaxSafe account maximizes FDIC insurance coverage, offering protection for balances ranging from $250,000 up to $3.75 million per person by distributing deposits across multiple community bank charters.
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FDIC and DIF Insurance:
- Some banks offer accounts with both FDIC and Depositors Insurance Fund (DIF) coverage.
- DIF is a private insurance fund in Massachusetts that covers deposit amounts beyond the FDIC limits without a cap.
In conclusion, the article provides a comprehensive guide for individuals to navigate the complexities of insuring funds beyond the standard FDIC limit, offering various options and strategies to safeguard their money in times of financial uncertainty.
