Bank failures – like the latter Silicon Valley bank collapse—It can be scary, which increases the likelihood of losing your savings overnight. Fortunately, thanks to Federal Deposit Insurance Corp. Probably nothing to worry about.

Created by Congress in 1933 after a series of bank runs sparking the Great Depression, the entity was designed to protect the assets of middle-class depositors. The idea is that by reassuring depositors that their money is safe, the government can prevent the kind of panic-driven withdrawal race that can sink even healthy banks.

While the FDIC officially only covers up to $250,000 in deposits, fortunately, there are easy (and completely legal) methods. Multiply this amountTherefore, all your savings are protected by the FDIC.

The end result: If the news about Silicon Valley Bank- or signature bank, which also recently encountered a problem – are you wondering if you should take money from your own bank, feel free to. The answer is almost certainly “no”.

Read on to learn how the FDIC works and what exactly is covered.

What is FDIC insurance?

The FDIC is a federal regulator that is funded by deposit insurance premiums paid by member banks. The FDIC monitors the financial health of banks and makes sure they comply with consumer protection and lending laws. But its most famous function is aptly named – providing a backup for depositors in the event of an emergency bank failure.

The deposit insurance it offers keeps customers full (up to stipulated limits, usually $250,000) in the unlikely event of a bank failure. FDIC insurance coverage is automatic, as long as your money is held in an account at an FDIC member bank — you don’t need to apply for it.

FDIC insurance coverage limits

If you have AuditAnd savings Or any other deposit account, the FDIC limit is $250,000. For most bank customers, that’s more than enough — but there are a few caveats about FDIC coverage that you should keep in mind.

Deposit Coverage Limit per Bank, Per Depositor, and Per Ownership Class. Ownership categories include individual and joint accounts, various types of trust accounts, corporate and government accounts, and some interest and retirement accounts.

All this means that it is possible for one person to receive coverage well above $250,000. If you have $250,000 in two separate savings accounts in two different banks, the entire $500,000 should be covered. However, if you have $500,000 split between a checking account and a savings account at a bank, you’ll likely only be covered up to $250,000.

One way to boost your coverage limits without dealing with multiple banks: If you have a savings account in your name and a joint account that you share with your spouse, your family will be covered for $750,000. That’s because the FDIC considers joint accounts to be in a different “ownership class” than individual accounts and also insures them for up to $250,000 per depositor. You can use the FDIC Electronic Deposit Insurance Estimator An online tool to fill in your specific circumstances and see how much coverage you might get.

Another tip to make sure you’re covered: Look beyond your bank’s brand name, especially if you have a high-yield savings account or CD.

Many digital banks are actually brands of traditional banks. For example, BrioDirect is the digital brand of Webster Bank, and UFB Direct is the brand of Axos Bank. While these digital banks carry FDIC insurance, if you have deposits in the account at both the online brand and the parent company, you may be subject to the same $250,000 FDIC coverage limit.

If you are not sure, you can check the name of the FDIC member bank for your account using the FDIC Find the bank a tool.

You should also do due diligence regarding FDIC insurance on your deposits if you choose to hold the money with a non-bank fintech company. Although many of these new banks partner with FDIC member banks to offer deposit coverage, the FDIC savers say to be careful. Make sure you understand the terms under which your money is insured, including how, when and where your money is deposited with the company’s FDIC member banking partner.

What does FDIC insurance cover?

FDIC insurance covers what we tend to think of as everyday bank accounts—specifically, checking and savings accounts, both with and without interest. FDIC insurance also covers other types of deposit products including money market deposit accounts and CDs.

Deposit insurance does not cover stocks, bonds (including municipal bonds), mutual funds, life insurance, annuities, or crypto assets, although your interests may be covered by a different type of insurance. US Treasurys are also not covered by FDIC insurance, although the agency notes on its website that these instruments are backed by the US government, which is why they are considered safe haven investments around the world.

Here is the rundown:

Are money market accounts FDIC insured?

Includes FDIC coverage Money market deposit accountsalthough it does not cover money market mutual funds, which you buy through a broker.

Are CDs FDIC insured?

Certificates of deposit Insured by the Federal Deposit Insurance Corporation (FDIC), subject to comprehensive coverage limits. The exception to this rule is Mediated CDsThese products are purchased through middlemen, which puts them outside the scope of FDIC coverage.

Are credit unions FDIC insured?

Deposits held in the FDIC are not covered by FDIC insurance Credit unionsbut there is a parallel agency, the National Credit Union Administration, which offers equivalent deposit insurance—with a $250,000 limit the same as the FDIC’s insurance amount—on accounts and certificates held by credit union members.

If you are comparing NCUA vs. FDIC, you really won’t find any difference from a customer perspective. Like FDIC insurance, you get automatic NCUA insurance coverage if you do business with a member organization.

Are brokerage accounts FDIC insured?

Investment products such as stocks, bonds (including municipal bonds), and mutual funds are not covered by FDIC insurance. If you have a brokerage account and it loses value, this is a risk that you as an investor should be willing to take.

the Securities Investor Protection CorporationInc., an independent organization of brokers and dealers, offers coverage for lost cash and securities if you have them brokerage account In a SIPC member firm fail. The coverage limit is up to $500,000 per client and per institution (this limit remains in effect even if you have multiple accounts with the same broker), including a maximum of $250,000 in cash coverage.

Are cryptocurrency exchange accounts FDIC insured?

Since the FDIC does not insure any non-bank assets, cryptocurrency is not covered by the agency’s deposit insurance. Nor does it protect consumers from losses they may incur as a result of fraud or theft.

The cryptocurrency market operates in a regulatory gray space, and consumers are not getting the kind of protection they would get if they kept money in a bank or credit union. All cryptocurrency exchanges, brokers, custodians, and wallet providers fall outside the FDIC’s supervision and coverage umbrella.

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The advice, recommendations, or ratings in this article are the Buy Side’s own from the WSJ Editorial Team, and have not been reviewed or endorsed by our business partners.

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