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Frequently Asked Questions About FDIC Coverage

What kind of accounts are eligible for FDIC insurance?

FDIC insurance covers all types of deposits at an insured bank, including a checking account, negotiable order of withdrawal (NOW) account, savings account, money market deposit account (MMDA) or time deposit such as a certificates of deposit (CD). The FDIC does not insure safe deposit boxes or their contents. U.S. Treasury bills, bonds or notes are also not covered by FDIC insurance, but these investments are backed by the full faith and credit of the United States government.

What are the basic FDIC coverage limits?

The standard deposit insurance amount is $250,000 per depositor, per insured bank, for each account ownership category. The FDIC provides separate insurance coverage for a depositor's funds at the same insured bank if the deposits are held in different ownership categories. To qualify for this expanded coverage, the requirements for insurance coverage in each ownership category must be met. The ownership categories are as follows:

FDIC insurance covers depositors' accounts at each insured bank, dollar-for-dollar, including principal and any accrued interest through the date of the insured bank's closing, up to the insurance limit.

The FDIC insures deposits that a person holds in one insured bank separately from any deposits that the person owns in anther separately chartered insured bank.

On October 3, 2008, the Emergency Economic Stabilization Act of 2008 was enacted to enhance confidence in the United States banking system by increasing FDIC coverage from $100,000 to $250,000. Deposits at FDIC-insured institutions are insured up to at least $250,000 per depositor, per insured bank until December 31, 2013. On October 14, 2008, the FDIC announced its temporary Transaction Account Guarantee Program (TAG) which provides full coverage for noninterest-bearing transaction deposit accounts at FDIC-insured institutions that agree to participate in the program. Citizens Bank has agreed to participate in the program. The transaction account guarantee applies to all personal and business checking deposit accounts that do not earn interest, low-interest NOW accounts (that cannot earn more than .25% interest). The unlimited insurance coverage is temporary and will remain in effect for participating institutions through December 31, 2010. On July 21, 2010, President Barack Obama signed he Dodd-Frank Wall Street Reform and Consumer Protection Act into law, which, in part, permanently raised the current standard maximum deposit insurance amount to $250,000. The FDIC deposit insurance limit applies per depositor, per insured depository institution for each account ownership category. IRAs were increased permanently to $250,000 per depositor in 2006. Consumers can find additional information regarding the FDIC's deposit insurance coverage by calling the FDIC at 1-877-ASK-FDIC (1-877-275-3342).

What happens if I have a deposit account in an insured bank that fails?

The troubled bank may be purchased by a healthy one, in which case you would become a depositor in the healthy bank. If, however, that does not occur, the FDIC pays off depositors as quickly as possible. The payoff of insured accounts usually occurs within a few days after the failure.

What happens to insurance coverage after an account owner dies?

The FDIC insures a deceased person's accounts as if the person were still alive for six months after the death of the account holder. During this grace period, the insurance coverage of the owner's accounts will not change unless the accounts are restructured by those authorized to do so. Also, the FDIC will not apply this grace period if it would result in less coverage. There is no grace period if the beneficiary of a POD account dies. In most cases, insurance coverage for the deposits would be reduced immediately. Like informal revocable trusts, the six month grace period does not apply to the death of a beneficiary named in a formal revocable trust account. However, the terms of the former revocable trust may provide for a successor beneficiary or some other redistribution of the trust deposits. Depending on these terms, the insurance coverage may or may not change.

What are fiduciary accounts?

Fiduciary accounts are deposit accounts owned by one party but held in a fiduciary capacity by another party. Fiduciary relationships may include, but are not limited to, an agent, nominee, guardian, executor or custodian. Common fiduciary accounts include Uniform Transfers to Minors Act accounts, escrow accounts, Interest on Lawyer Trust accounts and deposit accounts obtained through a broker. The fiduciary nature of the account must be disclosed in the bank's deposit account records. The name and ownership interest of each owner must be ascertainable from the deposit account records of the insured bank or from records maintained by the agent. Funds deposited by a fiduciary of a person or entity are insured as the deposits of the owner if the disclosure requirements for fiduciary accounts are met.