Are High Yield Savings Accounts Safe? FDIC Insurance Explained
What FDIC insurance covers, how the $250,000 limit really works, whether online banks are as safe as branch banks, and the risks that insurance does not cover.
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Yes. A high yield savings account at an FDIC insured bank is protected the same way as a savings account at any big bank. The FDIC insures deposits up to $250,000 per depositor, per FDIC insured bank, for each account ownership category, and it says no depositor has lost a penny of FDIC insured funds since it was founded in 1933. The real risks are going over the limit, using an app that is not itself a bank, and rate cuts.
What does FDIC insurance cover?
FDIC insurance protects your deposits if an insured bank fails. According to the FDIC, it covers:
| Covered | Not covered |
|---|---|
| Checking accounts | Stocks and bonds |
| Savings accounts, including high yield savings | Mutual funds, including money market funds |
| Money market deposit accounts | Annuities and life insurance |
| Certificates of deposit (CDs) | Crypto assets |
Credit unions work the same way through the NCUA, which insures shares at federally insured credit unions up to $250,000 per account ownership category.
How does the $250,000 limit work?
The limit applies per depositor, per bank, per ownership category. Ownership categories include single accounts, joint accounts, certain retirement accounts and trust accounts. That means one person can have more than $250,000 insured at one bank if the money sits in different categories.
A common example: a joint account. The FDIC adds up each joint owner’s share of all their joint accounts at the same bank and insures that total up to $250,000. So a joint account with two owners can be insured up to $500,000.
Watch for sister brands. Some banks run several brands under one charter. Peak Bank is a division of Idaho First Bank, and Axos combines deposits across all its brands under one FDIC certificate. Money at two brands of the same bank shares one $250,000 limit.
Are online banks safe?
An online bank with an FDIC certificate is insured exactly like a bank with branches. What matters is the charter, not whether there is a building. Here are the FDIC certificates for every account in our ranking, which we confirmed in the FDIC BankFind database:
| Account | Chartered bank | FDIC certificate |
|---|---|---|
| Peak Bank Envision High Yield Savings | Idaho First Bank | 58095 |
| Western Alliance Bank High Yield Savings Premier | Western Alliance Bank | 57512 |
| Axos ONE Savings | Axos Bank | 35546 |
| SoFi Checking and Savings | SoFi Bank, N.A. | 26881 |
| Happen Bank LevelUp Savings | Happen Bank, N.A. | 32551 |
| American Express High Yield Savings | American Express National Bank | 27471 |
| Capital One 360 Performance Savings | Capital One, N.A. | 4297 |
| E*TRADE Premium Savings | Morgan Stanley Private Bank, N.A. | 34221 |
What about apps that are not banks?
Some popular money apps are technology companies that hold your deposits at a partner bank. Your money may be eligible for FDIC insurance at that partner bank, but only if certain conditions are met. The FDIC is clear on the key limit: deposit insurance does not protect against the insolvency or bankruptcy of a nonbank company. Before you deposit, check who the actual bank is and read the disclosures.
Can you get more than $250,000 of coverage?
Yes. Some banks spread your money across a network of partner banks so more of it is insured. Among the accounts we compare, E*TRADE Premium Savings offers up to $500,000 of FDIC coverage for individual accounts ($1 million joint), Axos offers up to $2.5 million in additional coverage and SoFi offers up to $3 million. You can also split money across different banks or ownership categories.
What happens if a bank fails?
The FDIC steps in and pays insured deposits, either by moving them to another bank or by paying depositors directly. The FDIC says it acts quickly to make sure access to insured deposits is not interrupted.
What risks are left?
- Rate cuts. Savings rates are variable and can fall.
- Uninsured balances. Anything above your coverage at one bank.
- Scams and account takeovers. Insurance covers bank failure, not fraud from someone tricking you into sending money. Use strong passwords and two factor sign in.
How to check any bank in two minutes
- Find the bank’s legal name in the footer of its website, usually next to “Member FDIC.”
- Search that name in the FDIC BankFind tool.
- Confirm the certificate is active and the name matches.
Compare every account we track, with live rates and dates, on our best high yield savings accounts page. See the bank and FDIC certificate behind every account we track in the best FDIC insured savings accounts.
Frequently asked questions
Is my money safe in an online bank?
Yes, if the bank is FDIC insured and your deposits are within the coverage limits. Online banks are insured exactly like branch banks.
How much of my savings is FDIC insured?
Up to $250,000 per depositor, per FDIC insured bank, for each account ownership category. Joint accounts are insured up to $250,000 per joint owner.
Has anyone lost money in an FDIC insured account?
The FDIC says that since it was founded in 1933, no depositor has lost a penny of FDIC insured funds.
Are money market funds FDIC insured?
No. Money market funds are investments and are not FDIC insured. Money market deposit accounts at a bank are insured.
Does FDIC insurance cover fraud?
No. FDIC insurance protects deposits if an insured bank fails. Fraud and unauthorized transactions are handled under separate rules and your bank’s policies.
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