Most certificates of deposit (CDs) are insured by the Federal Deposit Insurance Corporation (FDIC) if they’re issued by a member bank. That means your money is protected up to $250,000 per depositor, per bank, per account ownership category if the bank fails. But FDIC coverage isn’t automatic for every CD — and knowing which ones are insured can help you keep your savings safe.
How FDIC Insurance Works for CDs
The FDIC insures deposits held at banks and other government-backed financial institutions, including CDs. Here’s what to know about how coverage works:
- Coverage limits: FDIC insurance covers up to $250,000 per depositor, per bank, per ownership category. For example, if you have a single savings account and a joint account at the same bank, each is insured separately up to $250,000.
- Eligible accounts: FDIC coverage applies to checking accounts, savings accounts, money market deposit accounts and CDs.
- What isn’t covered: FDIC insurance does not cover investments like stocks, bonds, mutual funds and other non-deposit products.
- Keeping multiple accounts at one bank: Combined balances over $250,000 in the same ownership category aren’t fully insured. To maximize protection, consider spreading funds across different banks or ownership categories.
- Extra coverage potential: Certain ownership categories, like certain trusts, may qualify for more than $250,000 coverage at the same bank.
What FDIC Insurance Covers vs. What It Doesn’t Cover
Covers Doesn’t Cover Checking accounts, savings accounts, money market deposit accounts and CDs Stocks, bonds, mutual funds and other securities Deposits held at FDIC-insured banks Foreign CDs and certain brokered CDs Up to $250,000 per depositor, per bank, per account ownership category Losses from theft or fraud not tied to a bank failure
Types of CDs That Are FDIC Insured
The FDIC protects most CDs from banks and federally insured institutions. Common FDIC-insured CD types include:
- Traditional CDs: These are standard CDs that usually have a fixed rate and several term lengths available.
- No-penalty CDs: These CDs allow early withdrawals without penalties, while still offering FDIC protection.
- Add-on CDs: These accounts let you make additional deposits after the initial opening.
- Bump-up CDs: This account allows you to raise your rate during the term if interest rates increase.
- Online bank CDs: These CDs are offered by online banks, but you should double-check to ensure that the bank is FDIC-insured.
CDs That Aren’t FDIC Insured
Are all CDs covered by FDIC insurance? A few are actually not FDIC insured, including the following:
- Foreign CDs: These are issued by foreign banks and do not qualify for FDIC insurance.
- Yankee CDs: These CDs are issued by foreign banks that have branches in the U.S. They are available in U.S. denominations but are not insured.
Furthermore, not all banks are insured by the FDIC, which means you could be putting your hard-earned money at risk.
Banks that are insured by the FDIC protect your deposits up to legal limits, while credit credit unions offer similar products called share certificates, which are backed by the National Credit Union Administration (NCUA). Choosing an insured bank or credit union ensures your investment is protected.
How To Verify FDIC Insurance for a CD
You can follow these quick steps to determine if your CD is FDIC-insured:
- Check the bank’s website in the footer section for a disclaimer that says the bank is a “Member FDIC.”
- Confirm the bank’s exact legal name on the offer page.
- Look the bank up on the FDIC BankFind Suite tool and note the FDIC certificate number.
- Verify that the product is a deposit account and not an investment.
- Make sure that your total deposits stay within the $250,000 per depositor, per bank, per ownership category limit.
Tips for Using CDs Safely
Even though CDs at banks are typically FDIC-insured, there are still some risks associated with investing in them. Keep these tips in mind to invest safely.
- Vet the seller: You should avoid banks with complaints or a history of fraud. Check the U.S Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) records before sending money.
- Know the term and penalties: Make sure you review the CD’s maturity date, early withdrawal penalty, grace period and auto-renewal rules, and set a calendar reminder for yourself before surprise fees hit.
- Stay within coverage limits: Keep deposits under $250,000 per depositor, per bank, per ownership category, or spread funds across multiple banks or categories.
- Use secure channels: Always open accounts directly on the bank’s website, enable two-factor authentication and avoid wiring money to third parties.
Final Takeaway
Investing in CDs can be an excellent way to grow your savings, but only if your money is protected. Most banks are FDIC-insured, however, there may be a handful that aren’t. Before opening a CD, always confirm that the bank or credit union is federally insured — you can usually find this noted in the website footer. This extra step helps safeguard your investment.
FAQs on CDs and FDIC Insurance
Here are the answers to some of the most frequently asked questions about CDs and FDIC insurance.- How much money is covered by the FDIC for CDs?
- FDIC insurance protects up to $250,000 per depositor, per bank, per account ownership category. This limit applies to your combined total of all eligible accounts at the same bank — not just CDs.
- Are brokered CDs FDIC insured?
- Some brokered CDs are FDIC-insured if they're issued by an FDIC-member bank. Always verify coverage before purchasing, since not all brokered CDs qualify.
- Does FDIC insurance cover interest earned?
- Yes. If your CD is insured, the principal and interest earned — up to the $250,000 limit — are both protected if the bank fails.
- Are CDs safer than savings accounts?
- Both CDs and savings accounts at FDIC-insured banks are equally protected under FDIC rules. The main difference is accessibility. Savings accounts let you withdraw funds more freely, while CDs lock your money in for a set term in exchange for a fixed interest rate.
- Are online CDs safe?
- If you open a CD online at an FDIC-insured banking institution, including an online-only bank, the CD is protected under the same coverage as a CD opened in person at a brick-and-mortar bank.
Cynthia Measom contributed to the reporting for this article.