Yes, certificates of deposit are FDIC insured up to $250,000 per depositor, per bank, per ownership category

A Certificate of Deposit (CD) held at an FDIC-insured bank is protected by federal deposit insurance. If the bank fails, the FDIC will return your money up to the insurance limit. This protection applies whether your CD is a traditional fixed-rate CD, a high-yield CD, or any other type the bank offers.

The key word is "per bank." If you have CDs at two different banks, each account is insured separately up to $250,000. If you have multiple CDs at the same bank, the total of all your deposits at that bank—including savings accounts, checking accounts, and money market accounts—counts toward the $250,000 limit.

FDIC insurance does not protect you from early withdrawal penalties. If you break a CD before maturity, the bank will charge you a penalty, and the FDIC will not reimburse it. The insurance only covers the principal and accrued interest if the bank itself fails.

Key Takeaways

  • The FDIC insures CDs up to $250,000 per person, per bank, so spreading money across multiple banks increases your coverage.
  • FDIC insurance protects your money only if the bank fails, not if you withdraw early or the CD performs poorly.
  • You can verify that a bank is FDIC-insured by searching the FDIC's Bank Find tool on their website or asking the bank directly.
  • Ownership category matters: a CD in your name alone, a CD in joint names, and a CD in a trust are each insured separately up to $250,000.

How the $250,000 limit works across multiple accounts

The FDIC limit applies to the total of all your deposits at one bank under one ownership category. If you have a $150,000 CD and a $120,000 savings account at the same bank, both in your name alone, the FDIC will insure only $250,000 of the combined $270,000. You would lose $20,000 if the bank failed.

Opening accounts at different banks solves this problem. A $250,000 CD at Bank A and a $250,000 CD at Bank B are each fully insured because they are at separate institutions. The FDIC tracks coverage by bank, not by account type or balance.

Online banks and credit unions follow the same rule. An online bank is FDIC-insured if it is chartered as a bank and displays the FDIC logo. Credit unions are insured by the National Credit Union Administration (NCUA), which works the same way: $250,000 per member, per credit union.

Ownership categories and how they affect your coverage

The FDIC recognizes different ownership categories, and each one gets its own $250,000 of coverage at the same bank. A CD in your name alone, a CD you hold jointly with a spouse, and a CD held in a revocable trust are three separate categories and three separate insurance limits.

If you are married and have a CD in your name alone and another CD in joint names with your spouse at the same bank, you have $250,000 of coverage for each. The joint CD is insured as a separate category because the ownership structure is different.

Revocable trusts receive special treatment. If you name beneficiaries in a trust, the FDIC insures up to $250,000 per beneficiary, per bank, within the trust category. A trust with three named beneficiaries could have up to $750,000 insured at one bank, as long as the trust is the account owner.

How to verify a bank is FDIC-insured

Before opening a CD, confirm that the bank is FDIC-insured. The FDIC maintains a searchable database called Bank Find on its website. You can search by bank name or location to see whether an institution is insured and what its insurance coverage limits are.

Most traditional banks and many online banks display the FDIC logo on their website or in their account agreements. If you do not see it, search Bank Find or call the bank and ask directly. Banks are required to disclose their insurance status.

Some financial institutions use names that sound like banks but are not FDIC-insured. Investment firms, brokerage accounts, and money market funds are not covered by FDIC insurance. If you are buying a CD through a brokerage, the underlying bank may be insured, but the brokerage itself is not.

What FDIC insurance does and does not cover

FDIC insurance covers the principal you deposit plus any interest that has accrued and been credited to the account as of the date the bank fails. If you have a $100,000 CD earning 4.5% annually and the bank fails after six months, the FDIC will insure the principal plus the interest earned to that point.

FDIC insurance does not cover losses from early withdrawal penalties. If you withdraw $50,000 from a one-year CD after three months and the bank charges a $2,000 penalty, the FDIC will not reimburse the penalty. You are responsible for any fees the bank charges.

FDIC insurance also does not protect you if the CD performs worse than expected or if interest rates drop. The insurance is only triggered if the bank becomes insolvent and closes. If you locked in a low rate and rates rise, the FDIC will not compensate you for the difference.

What happens if your bank fails

If an FDIC-insured bank fails, the FDIC takes over the bank's assets and liabilities. In most cases, the FDIC arranges for another bank to assume the deposits, and you can access your money within a few business days through the new bank. Your CD terms remain the same unless the acquiring bank changes them.

If no bank takes over the deposits, the FDIC pays you directly. This process typically takes a few weeks. You will receive a check or electronic transfer for the insured amount. If your total deposits at the bank exceed $250,000, you will receive only the insured portion.

Bank failures are rare. The FDIC has been insuring deposits since 1933, and most banks operate without incident. The insurance exists as a safety net, not as a common occurrence.

Frequently Asked Questions

Can I have more than $250,000 insured at one bank?

Yes, if you use different ownership categories. A CD in your name alone, a joint CD with your spouse, and a CD in a trust at the same bank each have $250,000 of coverage. You can also add beneficiary designations to certain account types to increase coverage further.

Are high-yield CDs FDIC insured?

High-yield CDs are FDIC-insured if they are held at an FDIC-insured bank. The interest rate does not affect the insurance. A high-yield CD at a bank with FDIC coverage is protected the same way as a traditional CD.

What if I have a CD at a brokerage?

Brokerage-issued CDs may be FDIC-insured, but the brokerage itself is not. The underlying bank that issued the CD must be FDIC-insured. Ask the brokerage which bank issued the CD and verify that bank's FDIC status through Bank Find.

Does FDIC insurance cover CD penalties if I withdraw early?

No. FDIC insurance protects your principal and accrued interest if the bank fails. Early withdrawal penalties are charged by the bank and are your responsibility. The FDIC will not reimburse penalties.

If I move my CD to another bank, do I lose coverage?

No. Moving a CD to another bank does not affect FDIC coverage. The new bank's FDIC insurance applies to the CD once it is transferred. You may face an early withdrawal penalty from the original bank depending on your CD's terms, but the insurance itself is not affected.