Personal Finance · Explainer
How deposit insurance works in the US, UK and EU
Deposit protection is generous but conditional. The conditions are where savers get caught out.
The short answer
- US deposits are insured by the FDIC up to $250,000 per depositor, per insured bank, per ownership category.
- EU member states guarantee €100,000 per depositor per bank; the UK's FSCS limit is £85,000.
- Investments, crypto and money held at non-bank fintechs are not covered by deposit insurance.
Deposit insurance exists to stop bank runs. If depositors know their money is protected, they have no reason to queue at the door when a bank looks fragile. The schemes are national, the limits differ, and the exclusions matter more than most savers realise.
United States: the FDIC
The Federal Deposit Insurance Corporation insures deposits at member banks up to $250,000 per depositor, per insured bank, for each account ownership category. Ownership category is the part people miss: a single account and a joint account at the same bank are separately insured, so a couple can hold more than the headline figure at one institution. Covered products include checking and savings accounts, money market deposit accounts and certificates of deposit.
European Union and United Kingdom
Under the EU Deposit Guarantee Schemes Directive, member states guarantee eligible deposits up to €100,000 per depositor per credit institution, with national schemes doing the paying. In the UK, the Financial Services Compensation Scheme protects £85,000 per eligible depositor per authorised firm, with temporary higher cover for certain qualifying life events such as a property sale.
What is not covered
- Stocks, bonds, mutual funds and ETFs — these carry investment risk and sit outside deposit schemes.
- Crypto assets, whether held at an exchange or in a wallet.
- Money held at a non-bank payment or e-money firm, which typically safeguards funds rather than insuring them.
- Contents of a safe deposit box.
Fintech accounts and 'pass-through' cover
Many app-based accounts are not banks. They place customer money with a partner bank, and any deposit insurance depends on that arrangement being properly structured and the records being accurate. The protection is real when it works, but the depositor's relationship is with the intermediary, and recovery can be slower and more complicated than dealing with an insured bank directly. The provider's terms should state plainly which institution holds the money.
Sources
- Deposit Insurance At A Glance — Federal Deposit Insurance Corporation
- Deposit guarantee schemes — European Commission
- FSCS deposit protection limits — Financial Services Compensation Scheme
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