FDIC, or “"Federal Deposit Insurance Corporation,” and SIPC, or “Securities Investor Protection Corporation,” are both agencies that offer insurance that provides protection for your money, but that’s where the similarities end. We’ll look at FDIC vs. SIPC insurance to explain the differences and help you understand whether your account is insured.
What is FDIC and SIPC insurance?
FDIC and SIPC insurance both offer protection for your money in the case of bank or brokerage failure. FDIC covers funds in deposit accounts, like checking and savings accounts. SIPC covers brokerage-held securities, like stocks and bonds.
FDIC vs. SIPC insurance at a glance
For a simple way to remember the difference, think FDIC = bank deposits and SIPC = brokerage assets. This table gives you a quick overview:
Considerations | FDIC-insured banks | SIPC member brokerages |
|---|---|---|
What it covers | Funds in deposit accounts | Brokerage-held securities and cash |
Coverage limit | Up to $250,000 per depositor for each qualifying account ownership category. Your deposits are insured by the FDIC up to the maximum allowed by law. | $500,000 for securities and cash (up to $250,000 in cash) per account based on separate capacity |
When it applies | When an FDIC-insured bank fails | When an SIPC member brokerage firm fails |
How it works | The insured funds are either transferred to a bank that assumes the deposits and provides access to the funds or paid directly to the depositor | A claim for a specific account could be paid up to the coverage limit |
What is FDIC insurance?
The FDIC is an independent agency of the U.S. government that provides insurance for your bank deposits in the event that your FDIC-insured bank fails. In other words, if your funds are in an FDIC-insured bank account (such as at Ally Bank), your money is insured — up to $250,000 per depositor for each qualifying ownership category.
What does FDIC cover?
Deposit products insured by the FDIC include the following:
Checking accounts
Savings accounts
Read more: Explore different types of deposit accounts and how they fit your financial goals
What does FDIC not cover?
Investment products that are not deposits, such as mutual funds, annuities, life insurance policies and stocks and bonds, are not covered by FDIC insurance.
FDIC coverage amount
The standard insurance amount is $250,000 per depositor, per insured bank, for each ownership category.
What is SIPC insurance?
SIPC insurance protects investors against losses if their brokerage firm fails.
If your securities drop in value, the SIPC does not protect you. Its sole focus is restoring investor cash and securities as swiftly as possible after an SIPC member brokerage fails.
What does SIPC cover?
SIPC protects investors against the loss of cash and securities, such as:
Stocks and bonds
Treasury securities
Investment certificates of deposit (CDs)
Other securities held at SIPC member brokerages
What does SIPC not cover?
SIPC does not cover:
Foreign exchange trades
Investment contracts (such as limited partnerships)
Fixed annuity contracts not registered with the U.S. SEC
Commodity futures contracts, unless held in a special portfolio margining account
SIPC coverage amount
SIPC protects your accounts at one brokerage based on the type of account you have. Every type (like an individual account, joint account or retirement account) is covered separately. For each type, you’re protected up to $500,000 total, including up to $250,000 in cash.
FDIC vs. SIPC insurance
Neither FDIC or SIPC is “better.” You may need both depending on the types of accounts you hold.
FDIC | SIPC |
|---|---|
Up to $250,000 in deposits (per depositor and per ownership category) | Up to $500,000 securities and cash ($250,000 limit in cash) |
Covers checking, savings and money market deposit accounts; certificates of deposit | Covers securities and cash in brokerage accounts |
Different ways to maximize insurance | Some brokerages provide additional insurance |
Not all banks are FDIC insured | Not all brokerages are SIPC members |
How to know if your account is insured
Most banks and brokerages are covered, but it doesn’t hurt to double check. Both the FDIC and SIPC offer searchable databases of their members, so make sure that you’re currently banking and investing with insured institutions.
Ally Bank is FDIC insured. If your current financial institution isn’t insured, browse our bank accounts to find an offering that aligns with your financial goals. If you’re an investor, Ally Invest is a member of the SIPC.
FDIC and SIPC insurance: Why you need them
If you’re looking to better protect your money, it's important that you choose a brokerage that is an SIPC member and a bank that’s insured by the FDIC — just in case the worst were to happen.
