Yes, CDs are FDIC insured up to $250,000 per depositor per bank

Money you put into a certificate of deposit at an FDIC-insured bank is protected by the Federal Deposit Insurance Corporation. If the bank fails, the FDIC will return your deposit up to $250,000, plus any interest earned up to the moment the bank closed. This protection applies whether you have a three-month CD or a five-year CD.

The $250,000 limit is per depositor, per bank, per account ownership category. That means if you have $250,000 in a CD at Bank A and another $250,000 in a CD at Bank B, both are fully covered. If you have two CDs at the same bank totaling $400,000, only $250,000 is covered.

Not every bank is FDIC-insured. Most traditional banks and many credit unions are, but some online banks and all investment firms are not. Before you open a CD, check the bank's website or call and ask directly whether they carry FDIC insurance. The FDIC website has a tool called BankFind where you can search any bank by name to confirm.

Key Takeaways

  • The FDIC covers CDs up to $250,000 per person per bank, including interest earned.
  • You can have multiple CDs at different banks and each one gets its own $250,000 protection.
  • Credit unions often carry similar protection through the NCUA instead of the FDIC, with the same $250,000 limit.
  • Online banks are FDIC-insured if they are chartered banks; online-only investment platforms are not.

How the $250,000 limit works across multiple CDs

The $250,000 protection is tied to your ownership category at each bank. If you own a CD in your name alone, that is one category. If you own a joint CD with your spouse, that is a separate category and gets its own $250,000 protection. A CD held in trust for a beneficiary is yet another category.

This means a married couple can each have $250,000 in individual CDs at the same bank (total $500,000 protected), plus another $250,000 in a joint CD at that same bank, for a total of $750,000 in FDIC protection at one institution. The categories do not mix.

If you have $300,000 to invest and want all of it covered, you have two straightforward options: split it between two banks with $250,000 at each, or use different ownership categories at the same bank if you have a spouse or can set up a trust.

What happens if your bank fails

When an FDIC-insured bank closes, the FDIC steps in as receiver. They do not take over the bank and keep it running. Instead, they either arrange for another bank to buy the failed bank's deposits, or they pay depositors directly from the insurance fund.

In most cases, your CD transfers to the acquiring bank automatically, and you keep the same rate and maturity date. You do not have to do anything. The FDIC handles the transfer behind the scenes, usually within a few business days.

If no bank buys the deposits, the FDIC mails you a check for the amount covered (up to $250,000 plus accrued interest). This process typically takes a few weeks. You will not lose money on the covered portion, but you will lose any amount above $250,000.

Credit unions and NCUA insurance

If your CD is at a credit union rather than a bank, it is likely insured by the National Credit Union Administration (NCUA), not the FDIC. The coverage limit is identical: $250,000 per member per credit union per ownership category.

The NCUA operates the same way as the FDIC. If a credit union fails, your insured deposits transfer to another credit union or you receive a check. The protection is just as solid, but the agency handling it is different.

Check your credit union's website or ask a teller whether they carry NCUA insurance. Most federally chartered credit unions and many state-chartered ones do. A few credit unions carry private insurance instead, which may have different limits.

Online banks and whether they are truly insured

An online bank is FDIC-insured if it is a chartered bank, even if it has no physical branches. Banks like Marcus, Ally, and Discover are all FDIC-insured because they are subsidiaries of or operate under a banking charter. Their CDs carry the same $250,000 protection as any brick-and-mortar bank.

The confusion arises because some online investment platforms—like Robinhood, E-Trade, or Wealthfront—are not banks and do not carry FDIC insurance. If you buy a CD through an investment platform, check whether the platform itself is FDIC-insured or whether it holds your CD at an insured bank on your behalf. Some platforms do the latter, which still protects you.

If you are unsure, ask the company directly: "Is this CD held at an FDIC-insured bank?" A legitimate company will answer clearly. If they hedge or say "it depends," that is a sign to move your money elsewhere.

What FDIC insurance does not cover

FDIC insurance covers the principal and accrued interest on your CD. It does not cover losses from early withdrawal penalties. If you withdraw $50,000 from a five-year CD after one year and lose $2,000 to an early withdrawal penalty, the FDIC will not reimburse the penalty. That is a contractual cost you agreed to, not a bank failure.

FDIC insurance also does not cover CDs purchased through a brokerage firm, even if the brokerage is FDIC-insured. Brokered CDs are a separate product and carry different protections. Some brokered CDs are insured through the FDIC's "brokered CD" category, which has its own rules and limits.

Finally, FDIC insurance does not protect you from interest rate risk. If you lock in a 4% CD and rates rise to 6%, the FDIC will not compensate you for the lost opportunity. That is a market risk, not a bank failure risk.

How to verify FDIC insurance before opening a CD

Use the FDIC's BankFind tool at ifdic.gov. Type in the bank's name and state, and the tool will show you whether it is insured, what type of charter it holds, and when it was last examined. This takes 30 seconds and removes all doubt.

You can also call the bank directly and ask: "Is this bank FDIC-insured?" Any legitimate bank will say yes immediately. If they seem uncertain or evasive, that is a red flag.

For credit unions, use the NCUA's Credit Union Locator at ncua.gov. Search by name or state, and it will confirm whether the credit union carries NCUA insurance.

Frequently Asked Questions

If I have $500,000 in CDs at one bank, how much is covered?

Only $250,000 is covered if all the CDs are in your name alone. To cover the full $500,000 at one bank, you would need to use different ownership categories—for example, $250,000 in your individual name and $250,000 in a joint account with your spouse, or in a trust.

Does FDIC insurance cover my CD if the bank is sold to another bank?

Yes. When a bank is acquired by another bank, your CD transfers to the new bank with the same rate and terms. The FDIC does not step in because there is no failure—the bank was simply bought. Your coverage continues under the new bank's FDIC insurance.

What if my CD earns interest after the bank fails but before the FDIC pays me?

The FDIC covers accrued interest up to the moment the bank closed. If your CD was earning 4.5% and the bank failed mid-month, you receive your principal plus the interest earned through the failure date. Interest does not accrue after the bank closes.

Are CDs at online banks as safe as CDs at traditional banks?

If the online bank is FDIC-insured, yes—the protection is identical. The FDIC does not distinguish between online and brick-and-mortar banks. What matters is whether the bank holds an FDIC charter, not whether it has physical locations.

Can I lose money on a CD if the bank fails?

Only if your CD balance exceeds $250,000 at that bank. The amount over $250,000 is not covered by FDIC insurance. The covered portion is may provide, regardless of what happens to the bank.