Types of FDIC Insured Accounts

Bank symbol inside a shield signifying the safety that FDIC insurance provides.

The Federal Deposit Insurance Corporation [FDIC] has been tasked with securing deposits in U.S. banks since 1933 and it has been overwhelmingly successful. In fact, no depositor has lost a penny of FDIC-insured funds since the program was established. With this impressive track record, it is no surprise that companies work diligently to ensure their cash is covered by FDIC insurance.

The FDIC protects certain types of business deposits at more than 4,500 member banks nationwide. However, not all banks are members of the FDIC and not all types of accounts are covered. By understanding the types of investments the FDIC covers, you can choose the one with the right balance of liquidity and returns for your business without sacrificing safety.

Checking Accounts Are Covered by FDIC Insurance

Most businesses are familiar with checking accounts and maintain at least one for day-to-day operations. Fortunately, the funds in this type of account are covered by FDIC insurance – up to the applicable limit.

When should your business use a checking account?

Your business should consider a checking account when you need access to your cash quickly and easily. These accounts were developed with accessibility in mind due to their history of being used to write and receive checks. However, the extreme liquidity of checking accounts often requires companies to sacrifice high rates of return. Therefore, you may want to consider another option if a competitive rate of return is a higher priority than accessibility.

Savings and Money Market Deposit Accounts Are Covered by FDIC Insurance

In addition to a checking account for operational expenses, your business may invest in a savings or money market deposit account for cash reserves. Both types of accounts are covered by FDIC insurance up to the applicable limit when issued by a member bank. However, it is important to note that money market deposit accounts are different than money market mutual funds which are not covered by FDIC insurance.

When should your business use a money market or savings account?

Your business should consider a savings or money market account to invest cash that is not needed for daily operations but could be needed on short notice. These accounts offer a middle ground between checking accounts and Certificates of Deposit in terms of both liquidity and returns.

Certificates of Deposit Are FDIC Insured

A well-rounded cash management strategy typically includes longer-term investments – like Certificates of Deposit [CDs] – in addition to checking and savings accounts. If these CDs are offered by FDIC member banks, they are insured up to the applicable limit.

When should your business use CDs?

Your company should consider CDs when you have money that is not needed in the short-term and you are seeking a higher rate of return than you could earn in a traditional deposit account. CDs are also beneficial when you need to access your cash according to a set schedule – such as for a construction project – because you can “ladder” your CD maturities to match that schedule.

FDIC Insurance Is Limited

Even if you invest with an FDIC-member bank and choose a covered account type, some of your cash could still be at risk because FDIC insurance is limited to $250,000 per ownership category at each insured bank. This means FDIC insurance applies to the combined value of all FDIC-covered accounts your business owns at a particular bank.

To access additional coverage, you could open accounts at multiple FDIC-member banks to take advantage of the combined FDIC insurance of each bank. However, it is difficult and time consuming to manage the number of banking relationships necessary to achieve coverage for millions of dollars. Fortunately, there is a simpler way to access extended deposit protection.

Partner With ADM For Access to Extended FDIC Coverage

At the American Deposit Management Co. [ADM], we offer solutions that provide access to insurance through the FDIC or credit union equivalent, NCUA, for all your cash. We accomplish this by spreading your cash across our proprietary network of financial institutions so that each account is under the $250,000 limit.

With our deposit management solutions, you gain access to full government protection for all your funds without the hassle of managing multiple banking relationships. We also offer access to nationally competitive returns and accessibility to match your schedule – including accounts with next-day liquidity and CDs with multiple year terms. To learn more about our deposit management solutions and get started today, contact us.


*American Deposit Management Co. is not an FDIC/NCUA-insured institution. FDIC/NCUA deposit coverage only protects against the failure of an FDIC/NCUA-insured depository institution.

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