Yes, certificates of deposit are FDIC insured up to $250,000 per depositor, per bank, per account ownership category

A certificate of deposit (CD) held at a bank insured by the Federal Deposit Insurance Corporation (FDIC) is protected against the bank's failure. If your bank closes, the FDIC will return your principal and any accrued interest up to the insurance limit. This protection applies whether your CD is a traditional fixed-rate CD, a high-yield CD, or a promotional CD — the insurance coverage is the same.

The $250,000 limit is per depositor, per bank, per account ownership category. This means if you have $250,000 in a CD at Bank A and $250,000 in a CD at Bank B, both are fully insured. If you have two CDs at the same bank in your individual name, the total coverage across both CDs is $250,000, not $250,000 per CD.

FDIC insurance does not protect you against market risk, interest rate changes, or early withdrawal penalties. It protects only against the bank failing and being unable to return your money.

Key Takeaways

  • The FDIC insures CDs up to $250,000 per depositor, per bank, per account ownership category, covering both principal and accrued interest.
  • Coverage applies at each separate bank, so you can have $250,000 insured at multiple banks simultaneously.
  • FDIC insurance protects against bank failure only, not against early withdrawal penalties, interest rate drops, or other financial losses.
  • Joint accounts, retirement accounts, and trust accounts have separate insurance limits from individual accounts at the same bank.
  • You can verify a bank's FDIC insurance status using the FDIC's Bank Find tool on their website.

How the $250,000 limit works across multiple CDs and banks

If you hold multiple CDs at one bank, the FDIC adds them together and insures the total up to $250,000. A CD worth $150,000 and another worth $120,000 at the same bank would total $270,000, meaning $20,000 would fall outside the insurance limit. Only the first $250,000 is protected.

When you move to a different bank, the insurance limit resets. A $250,000 CD at Bank A and a $250,000 CD at Bank B are each fully insured because they are at separate institutions. The FDIC tracks coverage by bank, not by total deposits across all banks.

Account ownership category also matters. If you have a $250,000 CD in your individual name and a $250,000 CD in a joint account with your spouse at the same bank, both are fully insured. The joint account is a separate ownership category and gets its own $250,000 limit. Retirement accounts (IRAs, SEP-IRAs, straightforward IRAs) also have separate $250,000 limits from individual and joint accounts at the same bank.

Which banks carry FDIC insurance and how to verify

Most banks in the United States are FDIC insured, but not all. Credit unions are insured by the National Credit Union Administration (NCUA), a different federal agency with similar protections. Online banks, regional banks, and large national banks are typically FDIC insured, but you should confirm before opening a CD.

The FDIC provides a free tool called Bank Find on its website (fdic.gov). You enter the bank's name and state, and the tool shows whether it is FDIC insured, its insurance certificate number, and the date it joined the FDIC. If a bank does not appear in Bank Find, it is not FDIC insured.

When you open a CD, the bank's account agreement or disclosure documents will state that deposits are FDIC insured. If you do not see this statement, contact the bank directly or use Bank Find to confirm.

What FDIC insurance covers and does not cover

FDIC insurance covers the principal you deposit plus any interest that has accrued (built up) on the CD. If you deposit $10,000 in a CD that earns $500 in interest before the bank fails, the FDIC insures the full $10,500. Interest accrues according to the CD's terms, whether it is paid monthly, quarterly, or at maturity.

FDIC insurance does not cover losses from early withdrawal penalties. If you withdraw money from a CD before the maturity date, the bank charges a penalty (often several months of interest). The FDIC will not reimburse you for this penalty if the bank fails. The penalty is a contractual cost you agreed to when you opened the CD, not a bank failure loss.

FDIC insurance also does not protect against interest rate risk. If you lock in a 4% CD and rates rise to 5%, the FDIC does not compensate you for the lower rate. You are locked into the rate you agreed to at the time of purchase.

How FDIC insurance works if your bank fails

When a bank fails, the FDIC steps in as the insurer. The agency typically arranges for another bank to take over the failed bank's deposits and accounts. In most cases, you will see no interruption — your CD straightforward transfers to the new bank, and you continue earning interest at the original rate until maturity.

If no bank takes over the failed bank's deposits, the FDIC pays you directly. The agency has up to 13 months to return your insured funds, though in practice it usually happens much faster. You receive a check or electronic transfer for the amount up to $250,000 per account ownership category.

Bank failures are rare in the modern U.S. financial system. The FDIC has been in operation since 1933, and the insurance system has successfully protected depositors through multiple financial crises. The last significant wave of bank failures occurred in the 1980s and early 1990s.

Ownership categories that affect your insurance limit

The FDIC recognizes several account ownership categories, each with its own $250,000 insurance limit at the same bank. An individual account (in your name alone) is one category. A joint account (owned by two or more people) is a separate category. A revocable trust account is another category. Retirement accounts (traditional IRA, Roth IRA, SEP-IRA, straightforward IRA) each have their own category.

If you are the sole owner of an individual CD and also a co-owner of a joint CD at the same bank, you have two separate $250,000 limits. The individual CD is insured up to $250,000, and the joint CD is insured up to $250,000. However, if you own two individual CDs at the same bank, they share one $250,000 limit combined.

For joint accounts, the FDIC insures each owner's share separately. If you and your spouse each own 50% of a $500,000 joint CD, the FDIC insures $250,000 (your 50% share) and $250,000 (your spouse's 50% share), for full coverage of the entire CD. If one owner's share exceeds $250,000, only $250,000 of that owner's share is insured.

What to do if your CD exceeds the insurance limit

If you have more than $250,000 to deposit in CDs and want full FDIC coverage, open accounts at different banks. Each bank provides a separate $250,000 insurance limit. You could deposit $250,000 at Bank A, $250,000 at Bank B, and $250,000 at Bank C, with all funds fully insured.

Alternatively, use different account ownership categories at the same bank. You could open an individual CD for $250,000, a joint CD with your spouse for $250,000, and a revocable trust CD for $250,000 at the same bank, and all three would be fully insured. This approach requires more account management but keeps all your CDs in one place.

Some people use a CD ladder strategy — opening multiple CDs with staggered maturity dates — across different banks to manage both insurance coverage and liquidity. This approach lets you access portions of your money at regular intervals while keeping all funds insured.

Frequently Asked Questions

Does FDIC insurance cover my CD if the bank is sold or merges with another bank?

No. FDIC insurance protects you only if the bank fails and cannot return your deposits. A merger or sale is a normal business transaction. Your CD transfers to the new owner, and you continue earning interest at the original rate until maturity. Your coverage does not change.

Are online bank CDs FDIC insured?

Most online banks are FDIC insured, but you must verify. Use the FDIC's Bank Find tool to confirm the online bank's insurance status. Many online banks offer higher CD rates than traditional banks and carry the same FDIC protection.

What happens to my CD if I die before it matures?

Your CD becomes part of your estate and passes to your beneficiaries according to your will or state law. FDIC insurance continues to cover the CD up to $250,000 per ownership category. If your estate is the account owner, the FDIC treats it as a separate ownership category with its own $250,000 limit.

Can I increase my FDIC coverage by adding a beneficiary to my CD?

No. Naming a beneficiary does not create a separate insurance category or increase your coverage. The FDIC insures based on account ownership, not on who receives the money after you die. A beneficiary designation is a legal instruction for where the money goes, not an insurance mechanism.

Is my CD insured if I buy it through a brokerage firm?

FDIC insurance depends on where the CD is held, not where you bought it. If a brokerage places your CD at an FDIC-insured bank, it is insured. If it places your CD at a non-insured institution, it is not. Ask the brokerage which bank holds the CD and verify that bank's FDIC status using Bank Find.