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Frequently Asked Questions (FAQs) About Deposit Insurance

Question: Does FDIC insure just the principal on an account, or both principal and accrued interest?

Question: Can deposit insurance be increased by depositing funds into several different accounts all at the same financial institution?

Question: I have my IRA at the same financial institution that my checking and CDs are at. Is my IRA insured separately?

Question: I have two CDs, a checking account, and a regular savings account, all in my name alone. Are my CDs separately insured from my other accounts?

Question: My banker tells me that if I set up an account with my wife, "In Trust For" our three children, that I will be covered by the FDIC for up to $600,000. Is this true?

Question: If I set up two joint accounts with my husband, one with me as the "primary" user (my name first, using my Social Security number) and another with him as the "primary" user (his name first, using his Social Security number) will those accounts be separately insured?

Question: I have just learned that, due to accrued interest, my CD exceeds the insurance limit. Will I get all my money (principal and interest) when the CD matures, or just the insured portion?

Question: If I have my funds on deposit at two different financial institutions, and those two financial institutions are closed on the same day, are my funds added together, or insured separately?

Answer: FDIC insures principal and interest, up to the insurance maximum (at least $100,000). For example, if an individual had an account with a principal balance of $95,000 plus $4,000 accrued interest, the total amount would be insured by the FDIC. If, however, the principal balance on that account was $100,000, the accrued interest on that account would not be insured; not because it was interest, but because that was the amount over the insurance limit.

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Answer: No. All funds held in the same type of ownership at the same institution are added together before deposit insurance is determined. If the funds are in different types of ownership, or are deposited into separate institutions, however, they would then be separately insured.

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Answer: Yes. IRA funds are separately insured up to $100,000 from all non-retirement funds you hold at the same institution.

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Answer: No. The type of account (Checking, NOW, Savings, Money Market Deposit, or CD) does not affect the insurance coverage. Rather, the type of ownership (Single, Joint, Trust, Retirement) is what determines if funds will be separately insured or added together.

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Answer: Yes. Testamentary trust accounts, also called Payable-on-Death (POD) or In Trust For (ITF) accounts, are separately insured up to $100,000 per beneficiary if the beneficiary is the spouse, child, grandchild, sibling, or parent of the owner. Since there are two owners, and each owner has three qualified beneficiaries, the funds are insured up to $600,000. It does not matter that the beneficiaries for each owner are the same.

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Answer: With the deposit insurance rule changes made in April 1999, all funds in joint accounts are insured on a per person basis up to $100,000. Each person's individual share in all joint accounts at the institution is added together and the total for each person insured to $100,000. Rearranging the order of names or changing the Social Security number does not increase the insurance on a joint account.

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Answer: You would receive all the money due to you. FDIC insurance only comes into play when an insured financial institution is closed, and the FDIC makes payment to the failed institution's depositors.

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Answer: Your funds from each institution would be insured separately, regardless of the date of close

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