Yes, CDs are covered by FDIC insurance up to $250,000 per depositor, per bank, per ownership category

The Federal Deposit Insurance Corporation (FDIC) protects certificates of deposit the same way it protects savings and checking accounts. If the bank fails, the FDIC will reimburse you up to $250,000 for each CD you hold at that institution. This protection applies whether your CD matures in three months or five years.

The $250,000 limit is per depositor per bank per ownership category. That means if you have a CD in your name alone at Bank A and another CD in your name alone at Bank B, each is covered separately up to $250,000. But if you have two CDs both in your name at the same bank, the FDIC combines them and covers only $250,000 total across both.

FDIC coverage is automatic. You do not need to register, pay a fee, or take any action. As long as your bank is FDIC-insured (which nearly all banks are), your CD is protected from the moment you open it.

Key Takeaways

  • The FDIC covers CDs up to $250,000 per person per bank, and this limit is combined with all other deposit accounts you hold at that same bank in your own name.
  • If you have more than $250,000 to deposit, you can increase your coverage by opening CDs at different FDIC-insured banks or by using different ownership categories like joint accounts or trust accounts.
  • FDIC coverage applies only to the principal and accrued interest up to the time the bank fails; it does not cover losses from early withdrawal penalties or market risk.
  • Credit unions use a similar system called NCUA insurance, which also covers up to $250,000 per depositor per institution.

How the $250,000 limit works across multiple accounts

The FDIC combines all deposits you hold in your own name at a single bank. If you have a $150,000 CD and a $120,000 savings account at the same bank, the FDIC covers only $250,000 total—leaving $20,000 unprotected. The bank's failure does not matter; the rule is about the institution, not the account type.

To protect deposits over $250,000, you have two main options. First, spread your money across different FDIC-insured banks. A $300,000 CD at Bank A and a $300,000 CD at Bank B are each fully covered because they are at different institutions. Second, use different ownership categories at the same bank. A CD in your name alone, a CD in a joint account with your spouse, and a CD held in trust for your child are each covered separately up to $250,000.

You can check whether a bank is FDIC-insured by searching the FDIC's Bank Find tool on their website. Enter the bank name and your state, and the tool will show you its FDIC status and certificate number.

What FDIC coverage includes and excludes

FDIC insurance covers the principal you deposited plus any interest that has accrued up to the date the bank fails. If you opened a $10,000 CD at 4.5% annual interest and the bank failed after six months, you would receive your $10,000 plus roughly $225 in accrued interest (the exact amount depends on how the bank calculates daily interest).

FDIC coverage does not cover losses from early withdrawal penalties. If you withdraw your CD before maturity and the bank charges a $500 penalty, the FDIC will not reimburse that penalty. Similarly, FDIC insurance does not protect against market risk or changes in interest rates—it only protects against bank failure. If you lock in a 2% CD and rates rise to 5%, the FDIC cannot help you.

The FDIC also does not cover safe deposit boxes, investment products like stocks or mutual funds, or money held outside the bank (such as cash you keep at home). CDs held at brokerage firms are covered differently and may have different limits depending on how the brokerage structures them.

Ownership categories that each get separate coverage

The FDIC recognizes several ownership categories, and each one receives its own $250,000 of coverage at the same bank. Understanding these categories is important if you want to protect more than $250,000 at a single institution.

Single ownership covers deposits in your name alone. Joint ownership covers deposits held with one or more other people, where each owner has equal rights. The FDIC insures joint accounts up to $250,000 per co-owner, so a joint account with two owners is covered up to $500,000 ($250,000 per person). Revocable trust accounts cover deposits you hold in trust for one or more beneficiaries, with up to $250,000 per beneficiary. Irrevocable trust accounts are covered up to $250,000 per beneficiary as well, but the terms of the trust cannot be changed.

Other categories include retirement accounts (covered up to $250,000 per person), accounts held for a minor under a custodianship, and accounts held by a business. Each category is separate, so you could theoretically have a $250,000 CD in your name alone, a $250,000 joint CD with your spouse, and a $250,000 revocable trust CD for your child at the same bank, and all three would be fully covered.

What happens if your bank fails

Bank failures are rare in the modern U.S. The FDIC has been insuring deposits since 1933, and the last bank failure was in 2023. When a bank does fail, the FDIC steps in quickly. It typically arranges for another bank to assume the failed bank's deposits, so you may wake up to find your CD transferred to a new institution with no action required on your part.

If no bank assumes your deposits, the FDIC pays you directly. You will receive a check or electronic transfer for the amount covered by insurance, usually within a few business days. The FDIC maintains a claims process and can be reached at 1-877-ASK-FDIC if you have questions about your coverage after a failure.

The FDIC's role is strictly to reimburse you for deposits lost to bank failure. It does not manage your CD, change its terms, or extend its maturity date. If your CD was set to mature on a specific date, that date may shift slightly depending on which institution takes over your account, but the principal and accrued interest remain protected.

Credit unions and NCUA insurance

If your CD is at a credit union rather than a bank, it is covered by the National Credit Union Administration (NCUA), not the FDIC. NCUA insurance works the same way: up to $250,000 per depositor per credit union per ownership category. The rules for joint accounts, trust accounts, and other categories are identical to FDIC rules.

You can verify whether a credit union is NCUA-insured by searching the NCUA's Credit Union Locator on their website. Nearly all federally chartered credit unions and most state-chartered credit unions carry NCUA insurance. A few credit unions carry private insurance instead, which may have different limits or terms.

Frequently Asked Questions

If I have $500,000, how do I make sure it is all covered?

Open CDs at two different FDIC-insured banks, putting $250,000 at each. Or use different ownership categories at the same bank: $250,000 in your name alone, $250,000 in a joint account with your spouse, and $250,000 in a revocable trust for your child would each be covered separately. The FDIC website has a coverage calculator to help you map out your specific situation.

Does FDIC insurance cover a CD I bought through a brokerage?

It depends on how the brokerage structured it. Brokered CDs are often held at multiple banks behind the scenes, and each bank's portion is covered separately up to $250,000. Ask your brokerage how your specific CD is insured before you buy it. Some brokerages offer unlimited coverage across their network of partner banks, but you need to confirm this in writing.

What if my CD earns interest after the bank fails?

The FDIC covers interest accrued up to the date of failure only. Interest that would have been earned after the failure date is not covered. If your bank fails on the 15th of the month and your CD would have earned $50 by month-end, you receive only the interest earned through the 15th.

Can I lose my CD if the bank fails?

No. Your CD is protected up to $250,000 per ownership category. You will not lose the principal or accrued interest. The only scenario where you would lose money is if your total deposits at that bank exceed $250,000 in the same ownership category, in which case only the amount over $250,000 is uninsured.

Do I need to do anything to activate FDIC coverage?

No. FDIC coverage is automatic for all deposits at FDIC-insured banks. You do not need to register, pay a fee, or sign any paperwork. Simply opening a CD at an FDIC-insured bank means you are covered from day one.