How to get more than $250,000 covered by federal deposit insurance

The runs on Silicon Valley Bank and Signature Bank this month — and subsequent government actions to reassure depositors and calm capital markets — have brought one government agency back into the limelight: the Federal Deposit Insurance Corp., or FDIC.

The agency, created during the Great Depression, guarantees that every person with a deposit at an insured bank will receive up to $250,000 in the event that the institution fails. That number is inscribed on FDIC stickers that are all over bank branches and has become ubiquitous in the media since the instability began. However, there are ways to maximize the amount of money covered — even past the standard limit, according to Marketplace senior economics contributor Chris Farrell.

“So you open up a joint account, like with your spouse … and you put $500,000 into this joint account. It is completely insured because each of you is insured to $250,000,” Farrell explained in an interview with Marketplace’s David Brancaccio. “Plus, you each have your own checking and savings account, adding up to $250,000. So you are insured at the same bank up to a million dollars.”

The following is an edited transcript of their conversation.

David Brancaccio: I think by now, most people listening know that they’re insured up to $250,000 at the bank of their choice if things were to go south at the bank, right?

Chris Farrell: Right. So that’s the FDIC-insured bank, or if it’s a credit union, they have their comparable fund. Again, $250,000.

Brancaccio: All right. So that’s the limit. However, you could have two different types of accounts at the same bank. Not two same checking accounts for you as an individual, but different categories. What does that mean?

Farrell: So you open up a joint account, like with your spouse, you open up this joint account and you put $500,000 into this joint account. It is completely insured because each of you is insured to $250,000. Plus, you each have your own checking and savings account, adding up to $250,000. So you are insured at the same bank up to a million dollars.

Brancaccio: I see. And if you had an individual retirement account at a bank, that would be insured. There are certain things I don’t fully understand, like trust accounts, but you have to look up these different categories if you’re looking for more than $250,000 at the same bank.

Farrell: Right, and if you have more than $250,000 at the same bank, I would actually talk to your banker and make sure you understand the rules correctly. But there is another way to do this, which is, “Hey, Bank A, I got $250,000. I’m insured. Bank B, I got $250,000. I’m insured. Bank C, I got another $250,000. Completely insured. You can just open up different accounts at different banks.

Brancaccio: It’s actually been done. Remember that story? I think Bloomberg News reported on it a while back. Giannis Antetokounmpo. Milwaukee Bucks, right? Man knows his way around a basketball. He also seems to know how to find deposit insurance in this country.

Farrell: Well, the owner of the Milwaukee Bucks tells this story that he had 50 different accounts at 50 different banks, each at the $250,000 insurance limit. His money was safe.

Brancaccio: All right. And just in case people have lost the thread, I think we all realize here that not a lot of people listening right now have more than 250K and therefore shouldn’t worry about this.

Farrell: Don’t worry about it. And by the way, you can go onto the website of the FDIC. It actually has a really good estimator for you.