Definition
Federal insurance covering bank deposits up to $250,000 per depositor, per bank, per ownership category, if the bank fails. Credit unions carry the equivalent NCUA coverage. Investment losses are not covered; only bank failure is.
Why it matters
FDIC coverage is why bank cash is genuinely safe and why the emergency fund belongs in a bank, not the market. Knowing the per-bank limit matters once savings grow large.
Example
A saver with $400,000 in cash splits it between two banks ($200,000 each) so every dollar sits inside the $250,000 FDIC limit. A joint account doubles coverage to $500,000 at one bank because each co-owner is insured.
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.