In this article, we’re answering “Are CDs FDIC Insured?” The short answer is “it depends”.
This article will be relevant for anyone interested in US banking, including foreigners who may not be able to meet the basic ID requirements of US banks but still want to open accounts.
Below, we’ll discuss the specific nuances that can impact whether a CD is insured when a CD is not insured, and answer common questions we receive on the topic.
Feel free to use the table of contents to jump ahead to the sections most relevant to you.
Table of Contents
Are CDs FDIC Insured?
CDs are FDIC-insured in most situations. The FDIC insurance covers CDs up to the limit of USD 250,000. FDIC insurance does not cover certificates of deposit if they are from brokers. CDs from brokers are referred to as brokered CDs and are purchased through a brokerage account.
With this in mind, if FDIC insurance is an important aspect of your banking and financial services plan, you should make sure you are not purchasing brokered CDs.
Additionally, if you are a foreign non-resident looking to open accounts in the US, you need to make sure you can meet the requirements as suggested above. This includes tax identification requirements, acceptable address requirements, and phone numbers.
Alternatively, if you are planning on obtaining lending products from US financial institutions, you will need to ensure the banks you apply to offer this option to non-residents.
If this is your first time visiting GlobalBanks, don’t forget to download your FREE US Banking Starter Guide. It’s designed to help non-residents with opening bank accounts at top financial institutions in the US.
Frequently Asked Questions
Below are a few of the most common questions we receive from people looking into if CDs are FDIC-insured. If you have further questions you would like to ask our team, don’t hesitate to get in touch.
Are All Banks FDIC-insured?
No, all banks are not FDIC-insured. However, the FDIC does insure the vast majority of US banks on the US mainland. For example, this includes 4,135 banks (EOY ‘22) with 71,190 branches across the United States.
Looking at the larger FDIC-insured banks that most individuals open accounts with, there are 2,135 banks that fall into this category, with more than 65,000 branches across the United States and more than 19 trillion USD in domestic assets.
What Types of CDs Aren’t Insured By the FDIC?
The types of CDs that aren’t insured by the FDIC are called brokered CDs. Brokered CDs refer to certificates of deposit that individuals buy through a brokerage account. In other words, these CDs are not held at a bank. Not surprisingly, there are various reasons why individuals may consider using a brokerage firm to purchase CDs. However, in most cases, holding uninsured deposits is usually not worth the additional risk.
What Is the FDIC Insurance Limit on CDs?
The FDIC insurance limit on CDs is the same amount as other insured accounts, which is USD 250,000 per insured bank and ownership category. For example, if an individual has CDs of USD 250,000 at five FDIC-insured banks, that individual would have a total insured balance of USD 1,250,000. However, if the same individual had one CD with a balance of USD 1,250,000 only the first USD 250,000 would be insured, the remaining USD 1,000,000 would not be insured in the event of a failure.
What Happens to My CD if My Bank Fails?
What happens to your CD if your bank fails depends on the value of the CD. For example, if you have a CD at your bank and it is less than (or equal to) USD 250,000, then the FDIC insures your CD. However, if you have a CD at your bank for an amount greater than USD 250,000, the FDIC does not insure the amount over USD 250,000 in the event of a bank failure.
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