Yes, certificates of deposit are guaranteed when you buy them from a federally insured bank or credit union. The FDIC insures bank CDs and the NCUA insures credit union share certificates up to $250,000 per depositor, per institution, per ownership category, and both guarantees are backed by the full faith and credit of the United States government.1FDIC.gov. Deposit Insurance – Understanding Deposit Insurance2National Credit Union Administration. NCUA Homepage Coverage is automatic. You do not apply for it, and you do not pay for it.
That guarantee is legally equivalent whether your CD sits at a bank or a credit union. If the institution fails, the federal government stands behind your insured balance.
What the $250,000 Actually Covers
The insured amount includes both your original deposit and any interest that has accrued through the date the institution closes. A CD with a $195,000 principal balance and $3,000 in accrued interest is insured for the full $198,000.3FDIC.gov. Deposit Insurance FAQs Because accrued interest counts toward the ceiling, a CD opened near $250,000 can drift above the limit as interest compounds.
The $250,000 cap applies to your combined deposits in the same ownership category at one institution, not to each CD separately. Checking, savings, money market accounts, and CDs held in your name alone at the same bank are added together. If you hold a $200,000 CD and a $60,000 savings account at the same bank, both in your name, $250,000 is insured and the remaining $10,000 is not.3FDIC.gov. Deposit Insurance FAQs Opening a second CD at the same bank in the same name does not add coverage. Splitting deposits across separate institutions does.
How to Get More Than $250,000 Guaranteed
Deposits held in different ownership categories at the same bank are insured separately. That lets a household protect well above $250,000 at a single institution.3FDIC.gov. Deposit Insurance FAQs
Single and Joint Accounts
Each person’s individually owned accounts are insured up to $250,000. Joint accounts are insured up to $250,000 per co-owner, so a two-person joint account is covered up to $500,000. A married couple can hold two individual accounts and one joint account at the same bank and cover $1,000,000 in total.
Trust Accounts
As of April 1, 2024, the FDIC combined its old revocable and irrevocable trust categories into a single trust accounts category. Coverage equals $250,000 multiplied by the number of eligible beneficiaries the owner names, capped at five. A single trust owner naming five or more beneficiaries can insure up to $1,250,000 at one bank.4FDIC.gov. Financial Institution Employee’s Guide to Deposit Insurance Payable-on-death and informal in-trust-for accounts fall in this category. The NCUA adopted a matching rule for credit unions, effective December 1, 2026.5Federal Register. Simplification of Share Insurance Rules
Retirement Accounts
Self-directed retirement accounts — Traditional IRAs, Roth IRAs, SEP IRAs, SIMPLE IRAs, and self-directed 401(k) plans — form a separate ownership category. All qualifying retirement deposits at one institution are added together and insured up to $250,000.6FDIC.gov. Financial Institution Employee’s Guide to Deposit Insurance – Certain Retirement Accounts Naming beneficiaries on a retirement account does not increase the amount insured. The same $250,000 retirement limit applies at credit unions.7National Credit Union Administration. Share Insurance Coverage
Business Accounts
Deposits held by a corporation, partnership, or unincorporated association are insured up to $250,000, separate from the owners’ or officers’ personal accounts. The entity must serve a legitimate business purpose, not one created to expand coverage, and must be validly formed under state law.8FDIC.gov. Corporation, Partnership and Unincorporated Association Accounts Multiple accounts held in the same entity’s name at one bank are combined.
What Happens to Your CD if the Bank Fails
Your principal and accrued interest are protected up to the insurance limit, but the terms of the CD can change. When another institution takes over the failed bank’s deposits, the original deposit contract ends. The acquiring bank may set a new interest rate, and you can lose the favorable rate you had locked in.9FDIC.gov. Is Your Bank Branch Relocating or Closing
If the new rate is lower, you can withdraw the full insured balance without paying an early withdrawal penalty and move it to a better-paying institution.9FDIC.gov. Is Your Bank Branch Relocating or Closing The federal guarantee protects your money. It does not guarantee that you continue earning your original rate for the remainder of the term.
CDs That Are Not Fully Guaranteed
Not every product marketed as a CD carries the same protection. A few variants deserve extra caution.
Brokered CDs
A brokered CD is bought through a brokerage firm rather than directly from a bank. It is FDIC-insured only if the broker actually places your funds into a CD at an FDIC-insured bank. If the broker does not do so, or deposits your money at an uninsured institution, you have no federal protection.10FDIC.gov. Shopping for a Certificate of Deposit Confirm the name of the underlying bank and verify its insured status before you buy.
Brokered CDs also carry a market risk that traditional CDs do not. To exit early, you typically sell on a secondary market rather than paying an early withdrawal penalty. If rates have risen since your purchase, buyers will pay less for your lower-rate CD and you may sell at a loss. A secondary market may not always be available, which can leave your money tied up until maturity.11Investor.gov. Brokered CDs – Investor Bulletin The insurance covers bank failure, not market losses from an early sale.
Callable CDs
A callable CD lets the issuing bank redeem the CD before maturity. If rates fall, the bank may call the CD to stop paying you the higher rate. You get your principal and interest earned to that point, but not the future earnings you expected. The call right belongs only to the bank. You still owe an early withdrawal penalty if you want out. Callable CDs usually pay a higher initial rate to compensate for that one-sided risk.
Private Notes and Foreign Deposits
Certificates of investment or investment notes issued by corporations or private firms are not insured by the FDIC or NCUA. They depend on the financial health of the issuer, and a default can mean a total loss. Deposits held at foreign branches of domestic banks generally fall outside federal deposit insurance as well. A high-yield “certificate” from any entity that is not a federally insured bank or credit union does not carry the federal guarantee.
How to Verify a CD Is Insured
Before you deposit anything, confirm the institution is federally insured. For banks, the FDIC’s BankFind tool searches by bank name, FDIC certificate number, or web address.12FDIC. BankFind Suite – Find Insured Banks For credit unions, the NCUA’s Credit Union Locator searches by name, address, or charter number.7National Credit Union Administration. Share Insurance Coverage
To check that all your accounts at one bank stay under the coverage limits across ownership categories, use the FDIC’s Electronic Deposit Insurance Estimator. EDIE calculates coverage across personal, business, and government accounts and evaluates CDs, savings, checking, and money market balances together.13FDIC. Electronic Deposit Insurance Estimator (EDIE) Running the numbers once, before you deposit, is the simplest way to know your CD is actually guaranteed.