FDIC insurance
By Jude Wallis
FDIC insurance protects eligible deposits at an insured bank if that bank fails. Coverage is automatic and is measured per depositor, per insured bank, and per ownership category.
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Eligible deposits include checking, savings, money market deposit accounts and certificates of deposit. Stocks, bonds, mutual funds, annuities and crypto assets are not deposits, even when a bank sells them.
The standard one-category limit is applied after balances in that category at that bank are added together. Opening extra accounts in the same name does not multiply the limit.
Liquidity is how fast cash can be spent. FDIC coverage is what happens to an eligible deposit if the bank closes. How FDIC insurance works is the explainer. The FDIC insurance calculator applies the one-category identity.