FDIC insurance is the protection provided by the Federal Deposit Insurance Corporation to people and businesses that hold deposits at insured banks and savings institutions in the United States. If an insured bank fails, the agency pays depositors or transfers their accounts to another bank, usually within days. It is the United States form of deposit insurance, backed by the full faith and credit of the federal government and funded by premiums that banks pay into the Deposit Insurance Fund.
The standard limit is 250,000 dollars per depositor, per insured bank, for each ownership category, such as single accounts, joint accounts and certain retirement accounts. Coverage applies to checking and savings accounts, money market deposit accounts and certificates of deposit. It does not cover shares, bonds, mutual funds, crypto assets or the contents of safe deposit boxes, even when bought through a bank. Balances above the limit are uninsured deposits.
The insurance protects against the failure of a bank only. Customers of a fintech app are covered solely through pass-through deposit insurance, and only if their money is actually held at an insured bank with proper records of who owns it. The failure of a non-bank company is not an insured event. Credit unions have a parallel scheme run by a separate agency.