Are CDs FDIC Insured?

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

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^[0]

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.

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.