Finance
FDIC Limits ($250K)
FDIC insurance protects deposits up to $250,000 per depositor, per insured bank, per ownership category — with straightforward ways to stack coverage.
The Federal Deposit Insurance Corporation backs deposits at member banks up to $250,000 per depositor, per bank, per ownership category. A business with $2 million in a single operating account has $1.75 million uninsured — a real risk that most owners underestimate until a bank runs into trouble.
The three coverage variables can be stacked. 'Per depositor' means each legal entity gets its own $250,000 limit — the business, the owner personally, a trust, an LLC. 'Per bank' means moving money across banks multiplies coverage. 'Per ownership category' means single accounts, joint accounts, retirement accounts, and revocable trust accounts each carry a separate $250,000 shelf at the same bank.
Programs like IntraFi's ICS and CDARS distribute deposits across a network of member banks while keeping the whole balance under FDIC insurance and giving you a single statement. Cash sitting in U.S. Treasury bills or a government money-market fund carries full government backing outside the FDIC framework.
Common pitfalls
- Leaving all operating cash at one bank because 'it has never failed' — SVB depositors learned this at 2 a.m. on a Friday
- Assuming the business's LLC gets separate coverage from the owner's personal account at the same bank — sometimes yes, often no
- Counting on 'sweep to treasury' features without checking whether the sweep is FDIC-insured or SIPC-insured (they are different)
- Forgetting that credit-union deposits are covered by the NCUA, not the FDIC — same $250,000 idea, different agency
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