If a U.S. FDIC-insured bank fails, the FDIC generally makes insured deposits available through a healthy bank that takes them over, or pays depositors directly if no bank assumes them. The standard insurance limit is $250,000 per depositor, per insured bank, per ownership category. Any balance above the applicable limit is an uninsured claim in the failed bank’s receivership—not a guaranteed FDIC payment.
What happens immediately after a bank closes?
The FDIC takes on two distinct roles: it acts as insurer for covered deposits and as receiver for the failed bank. As receiver, it handles the bank’s assets and debts, including claims for deposits above insurance limits. The FDIC explains these roles in its Deposit Insurance FAQs.
Insured deposits are generally made available by one of two routes:
| Resolution route | How you access insured money | What to expect |
|---|---|---|
| Another insured bank assumes the deposits | You access the deposits through the acquiring bank. | You may need to establish an account with that bank. It is not required to preserve the failed bank’s rates or other account terms. |
| FDIC pays depositors directly | The FDIC pays the insured balance if no bank assumes the deposits. | The FDIC says its goal is to make deposit insurance payments within two business days, but complex coverage determinations can take longer. |
These are the FDIC’s two general payment routes described on its Payment to Depositors page. Trust arrangements, brokered deposits, and other accounts requiring supplemental documentation may take longer to determine, so the two-business-day goal is not a guarantee that every depositor will have immediate access.
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How the $250,000 limit applies
The standard limit is $250,000 per depositor, per FDIC-insured bank, per ownership category. The FDIC counts principal and interest accrued or due through the date the bank fails. Accounts in the same ownership category at the same bank are generally combined when calculating coverage.
Separate branches of the same insured bank do not provide separate limits. Deposits at a different FDIC-insured bank generally have a separate limit. The FDIC explains the calculation in Understanding Deposit Insurance.
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Ownership categories affect coverage
Categories include single accounts, joint accounts, certain retirement accounts, trust accounts, employee benefit plan accounts, business accounts, and government accounts. Each category has its own rules. For example, each co-owner’s shares across all joint accounts at one bank are combined and insured up to $250,000 for that co-owner in the joint-account category. Trust coverage depends on eligibility and beneficiary rules; simply counting names on an account is not enough to determine coverage. The FDIC summarizes category rules in Are My Deposit Accounts Insured by the FDIC?.
Check your own accounts
- List each account’s bank, balance, legal owner or owners, and ownership category.
- Combine accounts held at the same insured bank within each applicable category, following that category’s rules.
- Use the FDIC’s Electronic Deposit Insurance Estimator (EDIE), available through the FDIC’s deposit-insurance resources, or request an FDIC coverage determination if your accounts involve trusts, business arrangements, or other complex ownership.
What happens to money above the insurance limit?
The insured portion is handled through the deposit insurance process. Any uninsured excess becomes a claim against the failed bank’s receivership. The FDIC, as receiver, collects or sells assets and settles claims, but full or immediate recovery of uninsured funds is not guaranteed. See the FDIC’s guidance for depositors, creditors, and borrowers when a bank fails.
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Which accounts and products are covered?
At an FDIC-insured bank, covered deposit products include checking accounts, savings accounts, money market deposit accounts, and certificates of deposit, subject to the insurance limit and ownership-category rules. FDIC insurance does not cover investments just because a bank offered or held them. The FDIC lists mutual funds, annuities, life insurance, stocks, and bonds as examples of products that are not insured deposits in its Deposit Insurance FAQs.
Can the acquiring bank change your account terms?
Yes. The FDIC’s Your Insured Deposits brochure says the deposit contract was with the failed bank and is considered void when the bank fails. The acquiring institution does not have to keep the old rates or terms. The brochure says depositors may establish a new account with the acquiring bank or withdraw some or all funds without penalty.
Does this apply to every bank or account?
This explanation concerns deposits at U.S. FDIC-insured banks. It does not establish coverage for credit unions, which have a separate insurer, or for investment products that are not deposits. If you are unsure whether an institution or product is covered, verify it with the FDIC and review how the account is legally titled.
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