Yes. Certificates of deposit held at an FDIC-insured bank are protected by federal deposit insurance up to $250,000 per depositor, per bank, for each account ownership category.1FDIC.gov. Your Insured Deposits Coverage is automatic the moment you open the account — you don’t apply for it and you don’t pay a premium. The bank handles that as part of its FDIC membership. Both your principal and the interest that has accrued on the CD through the date of a bank failure are covered.2FDIC. Deposit Insurance FAQs A few products marketed as “CDs” don’t qualify, though, and the $250,000 cap works in ways that catch people by surprise.
How the $250,000 Limit Actually Works
The cap is per depositor, per insured bank, per ownership category. If you hold several CDs at the same bank in the same category — say three individual CDs totaling $300,000 — those balances are added together and only $250,000 is insured.3Office of the Law Revision Counsel. 12 USC 1821 – Insurance Funds
Two details trip up careful savers.
First, accrued interest counts against the limit. A CD with a $245,000 principal and $6,000 of accrued interest totals $251,000, and only $250,000 of that is insured.2FDIC. Deposit Insurance FAQs When you buy a CD close to the ceiling, project the interest the deposit will earn over the full term so you don’t drift above the cap.
Second, CDs are not insured in isolation. Every deposit you hold at the same bank in the same ownership category is pooled before the limit is applied: checking, savings, money market deposit accounts, and CDs all count together.3Office of the Law Revision Counsel. 12 USC 1821 – Insurance Funds A $200,000 CD plus a $75,000 savings account held in your name alone at the same bank adds up to $275,000, with $25,000 outside the coverage.
Ownership Categories That Give You More Than $250,000 at One Bank
Because the limit applies separately to each ownership category, holding CDs in different categories at the same bank can multiply your coverage.
Joint Accounts
A joint account is insured separately from each owner’s individual accounts, with each co-owner receiving up to $250,000 for their share of all joint deposits at that bank.3Office of the Law Revision Counsel. 12 USC 1821 – Insurance Funds A married couple’s $500,000 joint CD is fully covered, and each spouse can still hold up to $250,000 in individual accounts at the same bank.
Trust Accounts
A CD held in a revocable or irrevocable trust is insured at $250,000 per eligible beneficiary, up to a maximum of $1,250,000 per trust owner at one bank when five or more beneficiaries are named. A trust with three beneficiaries is covered up to $750,000. Informal payable-on-death (POD) and in-trust-for (ITF) designations are calculated the same way.4FDIC.gov. Trust Accounts
Retirement Accounts
CDs held inside Traditional IRAs, Roth IRAs, SEP IRAs, SIMPLE IRAs, and certain employer-sponsored plans are insured separately from your other deposits. All qualifying retirement deposits at the same bank are combined under a single $250,000 cap.5FDIC.gov. Certain Retirement Accounts Adding beneficiaries to a retirement account does not raise that number, which is a point of confusion since trust accounts work the opposite way.
Business Accounts
A corporation, partnership, or unincorporated association gets its own $250,000 of coverage, as long as the entity is engaged in a legitimate business purpose and was not created only to expand insurance.6FDIC.gov. Corporation, Partnership and Unincorporated Association Accounts
Credit Union CDs: Different Agency, Same Coverage
Credit unions are not FDIC-insured. Federally insured credit unions are covered by the National Credit Union Share Insurance Fund (NCUSIF), administered by the National Credit Union Administration. The limit is identical: $250,000 per share owner, per insured credit union, for each ownership category.7Office of the Law Revision Counsel. 12 USC 1787 – Payment of Insurance At a credit union a CD is usually called a share certificate, and the NCUSIF is backed by the full faith and credit of the United States government, the same way FDIC coverage is.
Products Called “CDs” That Aren’t Actually Insured
The FDIC label travels with the deposit, not the word on the marketing page. Two situations deserve a careful look.
Brokered CDs
A brokered CD is bought through a brokerage firm rather than directly from a bank. It can still be FDIC-insured, but only if all three of these conditions are met: the broker places your funds at an FDIC-insured bank, the account records show the broker is acting as custodian for you rather than as the owner, and both your identity and your ownership interest are documented.8FDIC.gov. Pass-through Deposit Insurance Coverage If any one of those requirements fails, the deposit may be insured only in the broker’s name, which can leave your share uncovered. Before you buy, get in writing which FDIC-insured bank will hold the funds and how the account will be titled.
Brokered CDs also carry a secondary-market risk that bank CDs don’t. If you sell before maturity and interest rates have risen since you bought, you may have to accept a discount and lose part of your principal.9Investor.gov. Brokered CDs: Investor Bulletin
Private Investment Notes Marketed as “CDs”
Some companies use the word “CD” to sell high-yield investment notes to conservative savers. These are not deposits. They are unsecured debt of the issuing company, with no FDIC protection, and if the issuer goes bankrupt you stand in line as a general creditor. Stocks, bonds, mutual funds, annuities, and crypto assets are also outside FDIC coverage, even when sold on the premises of an insured bank.10FDIC. Understanding Deposit Insurance
What Happens to Your CD if the Bank Fails
If regulators close your bank, the FDIC steps in as insurer and receiver, and insured deposits are paid promptly after the failure.11FDIC.gov. Priority of Payments and Timing In most failures, the FDIC arranges for another bank to take over the deposit accounts, so your CD may simply move to the acquiring institution with little interruption. When no acquirer is available, the FDIC mails insurance checks directly to depositors.
If an acquiring bank takes over your CD, your original deposit contract no longer exists. The new bank may offer different terms, including a different interest rate, and in that case you can withdraw the full balance without an early withdrawal penalty.12FDIC.gov. Is Your Bank Branch Relocating or Closing
Any amount above the $250,000 limit is not paid quickly. Uninsured funds are distributed over time as the FDIC liquidates the failed bank’s assets, and full recovery is not guaranteed.11FDIC.gov. Priority of Payments and Timing
Six-Month Grace Periods for Mergers and Deaths
Two events can temporarily affect your coverage without penalizing you.
When one FDIC-insured bank acquires another, deposits you held at the acquired bank remain separately insured from deposits you already had at the acquiring bank for at least six months. CDs that mature after the six-month window stay separately insured until they mature. CDs that mature inside the window and are renewed for the same term and amount keep separate coverage through their first maturity after the grace period ends.13FDIC. Financial Institution Employee’s Guide to Deposit Insurance – Merger of IDIs If a merger pushes your combined balances past $250,000 at the surviving bank, use that window to move or restructure funds.
When a deposit owner dies, existing coverage continues for six months to give heirs time to retitle accounts. After six months, coverage is recalculated based on the actual new ownership.14eCFR. 12 CFR 330.3 – General Principles
Confirming a Bank Is Really FDIC-Insured
Verify a bank’s insurance status before you deposit. The FDIC’s BankFind Suite lets you search by bank name, certificate number, or website URL to confirm active coverage.15Federal Deposit Insurance Corporation (FDIC). BankFind Suite: Find Insured Banks In a branch, look for the official FDIC sign at teller windows. On a website, the “Member FDIC” line typically appears in the footer.
Fake-bank scams are a growing problem. Criminals build websites that display the FDIC name or logo to steal deposits or personal information. Watch for misspelled URLs, odd web addresses where a real bank name appears as a subpart of an unfamiliar domain, and interest rates that look too good to be true. If anything feels off, cross-check the name and URL in BankFind, or call the FDIC at 1-877-ASK-FDIC (1-877-275-3342).16FDIC.gov. Bank Impersonation Scams and Fake Banks
Insuring More Than $250,000 in CDs
If your CD balances exceed the cap, there are three practical ways to keep everything covered:
- Spread deposits across different FDIC-insured banks. The limit resets at each institution.
- Use different ownership categories at the same bank. Individual, joint, trust, and retirement accounts each carry a separate $250,000 limit.
- Use a deposit placement network. Services such as CDARS and ICS, operated by IntraFi, split a large deposit into amounts under $250,000 and place each piece at a different FDIC-insured bank in the network. You deal with one institution but your funds spread across many, giving access to aggregate coverage well into the millions.17IntraFi. ICS and CDARS