5 ways to ensure your money is safe and protected

It’s been more than six months since some of the largest bank failures made headlines. These failures caused some depositors to pull their money – fueled by social media posts – from banks that ended up failing and caused some uncertainty about the strength of the banking system.

These big bank failures are a great reminder to assess your bank’s insurance coverage under the Federal Deposit Insurance Corporation (FDIC) and be sure that you and your money are financially safe.

While there are years such as 2022, 2021, 2018, 2006 and 2005, which saw no bank failures, most years do see one or more banks fail. So it’s always good practice to check that you’re withi  the FDIC limits.

Here are five ways to make sure your money is safe in case of an FDIC bank failure. Adding another bank can not only add additional FDIC insurance, but it also can help you earn a competitive yield on your savings during a time when top savings yields are outpacing inflation.

1. Make sure your money is at an FDIC-insured bank

The FDIC shut down around 100 fake websites in 2021. So illegitimate websites did exist – and possibly exist today. But the FDIC’s BankFind Suite can help you search by bank or website in some cases, to confirm your money is at an FDIC bank.

Having your money at an FDIC-insured bank will protect your money in case of a bank failure – as long your balances are within FDIC limits and following the FDIC’s rules.

Banking at a company that isn’t an FDIC-insured bank could mean not getting all of your money back or experiencing delays getting your money back, according to the FDIC.

2. Check your FDIC coverage

The FDIC’s Electronic Deposit Insurance Estimator (EDIE) is one of the best ways to check that your accounts are within coverage guidelines. While it’s a great tool for estimating your insurance, always communicate with your bank as well to confirm insurance coverage based on your accounts and banking relationships.

The standard FDIC deposit insurance amount is $250,000 per depositor, per FDIC-insured bank, per ownership category.

“Other options or nuances to be aware of are differing Federal Deposit Insurance or the ability of getting additional Federal deposit insurance by titling accounts differently,” says Greg McBride, CFA, Bankrate chief financial analyst. “So for example, an individual account is insured separately from a joint account.”

The FDIC has a phone number. You can use this to confirm your FDIC coverage.

3. Know what products aren’t FDIC insured

FDIC insurance covers certain bank accounts at an FDIC bank in the event of a bank failure.

Here are products – even if they are sold in an FDIC-insured bank – that aren’t covered under FDIC insurance:

• Stocks
• Crypto assets
• Bonds
• Life insurance
• Annuities
• Municipal securities
• Items in a safe deposit box
• U.S. Treasurys

4. Expand your coverage strategically

Ownership categories are how a couple, they don’t have to be married, could have $1 million of FDIC coverage at an FDIC-insured bank.

So if a married couple both have their own individual savings accounts at ABC Bank with $250,000 in each account, and they have a joint account with $500,000 in it, the entire $1 million is covered under FDIC coverage limits – assuming they had no other funds at that bank or under that FDIC certificate. This is because single accounts (owned by one person) at that bank are insured $250,000 per owner and joint accounts (owned by two or more people) are insured $250,000 per co-owner.

“So a married couple with a joint account, and each having an individual account, they can insure up to a million dollars,” McBride says. “Just through that. Obviously there’s other nuances that can boost that further, such as retirement accounts and trust accounts.”

These are the different FDIC ownership categories:

• Single accounts
• Certain retirement accounts
• Joint accounts
• Revocable trust accounts
• Irrevocable trust accounts
• Employee benefit plan accounts
• Corporation/partnership/unincorporated association accounts
• Government accounts

5. An online bank can help you get even more FDIC coverage

FDIC insurance coverage at an online bank works just like it does at your neighborhood FDIC-insured brick-and-mortar bank.

Having your checking account at a member FDIC bank near you and having your savings at an online bank that’s FDIC insured can both help you get more FDIC insurance. And it can also help you earn a competitive yield on your savings.

Beware of hidden bank relationships that affect insurance limits

For instance, if you bank at both Citizens Bank and Citizens Access the deposits at both are treated as the same entity for FDIC insurance limits. Citizens Access is a division of Citizens Bank, N.A. So, it’s important to know if your bank has any relationships or shares any divisions with other banks for FDIC purposes.Some bank relationships might not be as easy to spot, such as Axos Bank and UFB Direct. Both of these banks are insured through the same FDIC certificate.

“Bank holding companies may have a number of different banks,” McBride says. “And so you can’t just go by name recognition alone. You want to check the FDIC website for the FDIC certificate number. That really delineates what is a separate institution from another.”

You can look up your bank here on the FDIC website.

“You’ve got to know which bank you’re dealing with,” McBride says. “And if you have other accounts already with that bank, that may also fall under the same $250,000 limit.”

Now is a great time to assess your current banking situation.

“You want to make sure which bank you’re insured by and verify that you’re looking at the right bank so that you don’t inadvertently have too much money under one roof or you’re looking under the wrong tree,” McBride says. “You think you have your money with one bank, but it’s really with another that has the same name in a different state.”

How to make sure your credit union is within coverage limits

For credit unions, the National Credit Union Administration (NCUA) is a U.S. government agency that offers protection through the National Credit Union Share Insurance Fund (NCUSIF). The NCUA also has its own calculator so that you can see if your accounts exceed insurance limits. But always check with your credit union to confirm your individual insurance coverage based on your accounts and banking relationships.

The standard share insurance amount for credit union accounts protected by the NCUSIF is $250,000 per share owner, per insured credit union, for each ownership category.

Use caution when banks are offering you extra FDIC insurance

There are specific dangers when a bank, or a non bank, offers pass-through FDIC insurance. These don’t exist when you’re dealing directly with an FDIC-insured bank that’s using its own FDIC insurance. For instance, at a company that isn’t a bank, the company needs to actually deposit your money at an FDIC-insured bank and it needs to be titled correctly, according to the FDIC.

Bottom line

You never know when a bank failure will occur. So it’s best to think about your coverage now – and not when bank failures are in the news. It’s more common for a bank failure to happen in a calendar year than for there not to be a failure.

Planning ahead will help you sleep well at night knowing you’re money is protected in case of an FDIC bank failure.