Certificates of deposit (CDs) are a type of interest-bearing bank account in which you deposit funds for a fixed period of time—usually between 3 months and 5 years—with the aim of earning a higher interest rate than you would with a standard savings account. Like all bank deposit accounts, the money you put in a CD is insured for up to $250,000 if the bank is a member of the Federal Deposit Insurance Corp. (FDIC).

Are CD Balances Insured by the FDIC?

The FDIC insures up to $250,000 per depositor, per FDIC-insured bank, per ownership category. That means if you have a checking account balance of $20,000, a savings account balance of $100,000, and a CD in the amount of $50,000 all at the same bank, you have a total of $170,000 that is covered by the FDIC insurance. 

However, if those balances in total or individually exceed $250,000, the FDIC wouldn't cover any amount more than amount. Therefore, it’s important to keep an eye on your account balances because you may need to move an account to a different bank to make sure your total assets are covered by the FDIC. 

Are CDs from Online Banks Also FDIC-Insured?

Yes, provided the online bank is FDIC-insured. This should be noted on the online bank’s website, but if it’s not or you're not sure, speak with a bank representative to confirm if the online bank is FDIC-insured. FDIC coverage limits for online banks are the same as with brick-and-mortar banks: $250,000 per depositor, per FDIC-insured bank, per ownership category.

Is My Brokered CD FDIC-Insured?

Unlike CDs available at banking institutions, brokered CDs must be purchased from brokerage firms and independent salespeople. If the brokered CD is set up in your name with an FDIC-insured bank, it will be covered by the FDIC up to the $250,000 limit per depositor, per FDIC-insured bank, per ownership category.

However, if the bank isn't FDIC-insured, it won't be covered. It’s important to find out beforehand where the brokered CD will be set up to ensure proper FDIC coverage. 

How Do I Get My Money if My Bank Fails?

If your bank fails, the FDIC could replace your insured funds in one of two ways. Within a few days following the bank closure, the FDIC could set up and fund a new account in your name at another bank with the amount you were insured for, or the FDIC could issue you a check for the insured amount.

The Bottom Line

CDs can be a great way to save money and earn interest to boost your savings. Getting CDs from an FDIC-insured bank protects that money up to $250,000 per depositor, per FDIC-insured bank, per ownership category. It’s important to always confirm your banking institution is FDIC-insured and to ensure that the total of all your deposit accounts at that institution doesn't exceed $250,000 to make sure your CDs are protected by the FDIC.