Are CDs FDIC Insured? - NerdWallet (2024)

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Locking up money in a certificate of deposit can be intimidating. For one, you have to hand over a lump sum of cash for months or years. And two, the highest rates tend to be at online banks, including some you’ve likely never heard of. But that doesn’t make them risky products.

First Republic Bank’s and Silicon Valley Bank’s collapses in 2023 may have you worried about your own deposits. Remember that deposit insurance, such as from the Federal Deposit Insurance Corp., is what protects your money in the rare event that your bank closes.

» MORE: Learn about which government agencies regulate banks

CDs are a safe way to set aside money because they have federal deposit insurance. Here’s a closer look at how that works.

Are CDs FDIC insured?

The short answer is yes. Like other bank accounts, CDs are federally insured at financial institutions that are members of a federal deposit insurance agency. If a member bank or credit union fails, you’re guaranteed to receive your money back, up to $250,000, by the full faith and credit of the U.S. government.

» Need more funds insured? Learn how to insure over $250K

The Federal Deposit Insurance Corp. (FDIC) insures banks, and the National Credit Union Administration (NCUA) insures credit unions. You don’t apply or pay for this insurance, since institutions pay for it on behalf of their consumers. (Check out NerdWallet’s article on FDIC insurance for more details.)

Most financial institutions are federally insured, but a rare few aren’t. One way to check for coverage is by scrolling to the bottom of a bank’s website to find the acronym FDIC or NCUA. Or you can look up your financial institution’s status on the FDIC’s BankFind tool or the NCUA’s Credit Union Locator widget.

» Ready to compare? See the best CD rates right now

🤓Nerdy Tip

CDs require you to give up access to your money. If you’d prefer to keep access, a high-yield savings account can be a better FDIC-insured option.

What if my bank fails?

Bank failures generally happen to very few banks, and Silicon Valley Bank was the first bank to fail since October 2020. Even if your bank fails, FDIC insurance guarantees your money, up to its limit.

First Republic Bank is the biggest bank to fail since the 2008 financial crisis, but regulators took steps quickly to protect customers. The FDIC secured JPMorgan Chase’s acquisition of First Republic Bank, and Chase assumed all customers’ deposits, insured and uninsured. In the case of the second biggest bank to fail since 2008, Silicon Valley Bank, the Treasury, Federal Reserve and FDIC said in a joint statement in March 2023 that all depositors were protected, even beyond the FDIC insurance limits .

How safe are online CDs?

Just as safe as other CDs. Most online banks offer FDIC insurance just like brick-and-mortar institutions. A tell-tale sign is seeing “Member FDIC” at the bottom of a website. The main difference between online and traditional banks is branch access for customer support; online banks usually provide help by phone and online channels only.

You might not recognize the best online CD providers. That doesn’t mean they’re untrustworthy. In some cases, an online bank is part of a bigger bank that you might be familiar with. For example, Citizens is an online division of Citizens Bank and Marcus by Goldman Sachs is the online banking platform of the well-known Wall Street investment firm.

Both online and brick-and-mortar banks protect customers with security processes and systems intended to prevent fraud and hacker attacks to your account, such as multi-factor authentication. Banks won’t call or email unexpectedly for sensitive details, such as login details.

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Tips for using CDs

Here are a few pointers to keep in mind before opening a CD.

1. Call customer support to see how quickly you can speak to a real person and whether help is available around the clock or only certain hours on weekdays.

2. Remember that CDs don’t allow additional contributions (except add-on CDs). CDs require that you put in a lump sum upfront. Unlike with a regular savings account, you can’t add more money after that initial deposit.

3. Keep a close eye on your CD’s maturity date and grace period. CDs have limited windows of time for you to withdraw or add more funds once the term expires. For more details, see what happens when CDs mature.

4. Make sure all your funds are insured. FDIC and NCUA insurance covers $250,000 per account. That includes any interest you earn. If you think some money won’t be insured, you can open CDs at different banks.

5. When you open a CD, save the paperwork. Banks typically don’t issue physical certificates as they once did, and with online CDs, statements might be entirely online. If you’re better at tracking physical instead of digital records, download and print any paperwork.

6. If you inherit or rediscover an old CD, call your bank to see if the CD is still active. If the bank doesn’t have a record of it, check this FDIC resource for the unclaimed property division in the state where the person opened that CD. Banks must eventually send inactive CDs to the state government, and the accounts can end up on a list of unclaimed property. Learn more about forgotten money.

See CD rates by term and type

Compare the best rates for various CD terms and types:

  • Best CD rates overall.

  • Best 3-month CD rates.

  • Best 6-month CD rates.

  • Best 1-year CD rates.

  • Best 3-year CD rates.

  • Best 5-year CD rates.

  • Best no-penalty CD rates.

  • Best IRA CD rates.

How do CDs work?

Learn more about choosing CDs, understanding CD rates, and opening and closing CDs.

For choosing CDs:

  • CD calculator.

  • Are CDs worth it?

  • CDs vs. regular savings accounts.

  • CDs vs. money market accounts.

For understanding CD rates:

  • Current CD rates.

  • Historical CD rates.

  • What 2023 Fed rate increases mean for CDs.

For opening CDs:

  • Opening a CD account in 5 steps.

  • What is a CD ladder?

  • How to invest in CDs: 3 strategies.

  • How much to put in CDs.

For closing CDs:

  • When your CD matures: What to know.

  • CD early withdrawal penalty: What to know.

  • CD early withdrawal penalty calculator.

See CD rates by bank

Here’s a quick list of CD rates at traditional and online banks and a brokerage:

  • Ally Bank CD rates.

  • Bank of America CD rates.

  • Capital One CD rates.

  • Chase CD rates.

  • Discover Bank CD rates.

  • Fidelity CD rates.

  • Marcus CD rates.

  • Synchrony Bank CD rates.

  • Wells Fargo CD rates.

Are CDs FDIC Insured? - NerdWallet (2024)

FAQs

Are CDs FDIC Insured? - NerdWallet? ›

Like other bank accounts, CDs are federally insured at financial institutions that are members of a federal deposit insurance agency. If a member bank or credit union fails, you're guaranteed to receive your money back, up to $250,000, by the full faith and credit of the U.S. government.

What happens to CDs if the bank fails? ›

The FDIC Covers CDs in the Event of Bank Failure

But the recent regional banking turmoil may have you concerned about your investment in case of a bank failure. CDs are treated by the FDIC like other bank accounts and will be insured up to $250,000 if the bank is a member of the agency.

Are CDs safe if the market crashes? ›

Are CDs safe if the market crashes? Putting your money in a CD doesn't involve putting your money in the stock market. Instead, it's in a financial institution, like a bank or credit union. So, in the event of a market crash, your CD account will not be impacted or lose value.

Are my CDs safe in the bank? ›

As long as you open a CD with a financial institution that's insured by the FDIC or the NCUA, your CD is protected up to $250,000 per person, per account category in case of a bank failure. That means you won't lose your deposit or interest earned (up to the insured amount) if the bank unexpectedly closes.

Are CDs guaranteed? ›

First, they are guaranteed by the bank or credit union that offers them, meaning that they are legally required to pay you exactly the amount of interest and principal agreed upon. Second, they are generally also insured by the federal government for up to $250,000.

What is a downside of CDs? ›

Penalties: One of the main drawbacks of CDs is that in most cases you're locked into the maturity term. If you take money from the CD before it matures, you will get hit with a penalty fee equal to at least seven days of the interest earned or even more.

Can a brokered CD lose money if held to maturity? ›

If a CD is sold on the secondary market at a lower value than its face value, it will have lost money. But there are no losses if the CD is kept until maturity.

Can I lose my money in a CD account? ›

Standard CDs are insured by the Federal Deposit Insurance Corp. (FDIC) for up to $250,000, so they cannot lose money. However, some CDs that are not FDIC-insured may carry greater risk, and there may be risks that come from rising inflation or interest rates.

What is the biggest negative of putting your money in a CD? ›

Banks and credit unions often charge an early withdrawal penalty for taking funds from a CD ahead of its maturity date. This penalty can be a flat fee or a percentage of the interest earned. In some cases, it could even be all the interest earned, negating your efforts to use a CD for savings.

Why am I losing money on my CD? ›

Early Withdrawal Penalties

The most common way people lose money through a CD account is by withdrawing their funds before the term ends. When you take money out of your CD account before the maturity date, you'll typically have to pay an early withdrawal penalty.

Are CDs covered under FDIC insurance? ›

CDs are federally insured by the FDIC. The FDIC insures deposit accounts up to $250,000 per depositor, per FDIC-insured bank and per ownership category. This includes savings and checking accounts as well as money market accounts and CDs.

Are Wells Fargo CDs safe? ›

All types of deposits held at Wells Fargo Bank are covered by FDIC insurance including the following examples: Checking Accounts. Savings Accounts. Time Accounts (CDs)

Are all CDs insured by FDIC? ›

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).

Should I buy a CD now or wait? ›

The decision to open a CD now or wait depends on many factors, including interest rates, when you'll need to access the funds and the state of your emergency fund. In general, when rates are high — as they are now — opening a CD allows you to maximize your earnings even if rates go down in the future.

How much money should I put in a CD? ›

The specific amount you put into a CD depends on your personal finances. The best way to decide how much money to put into a CD is to figure out how much cash you can afford to part with for an extended amount of time. While that amount will be different for everyone, you should keep a few things in mind.

Is it better to have one CD or multiple? ›

Use Multiple CDs to Manage Interest Rates

Multiple CDs can help you capitalize on interest rate changes if you believe CD rates will change over time. You might put some cash into a higher-rate 6-month CD and the remainder into a 24-month bump-up CD that allows you to take advantage of CD rate increases over time.

Are CDs guaranteed by the FDIC? ›

CDs are federally insured by the FDIC. The FDIC insures deposit accounts up to $250,000 per depositor, per FDIC-insured bank and per ownership category. This includes savings and checking accounts as well as money market accounts and CDs.

Will I lose my money if my bank collapses? ›

If your bank fails, up to $250,000 of deposited money (per person, per account ownership type) is protected by the FDIC. When banks fail, the most common outcome is that another bank takes over the assets and your accounts are simply transferred over. If not, the FDIC will pay you out.

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