Are CDs Safe and FDIC-Insured?

Are CDs FDIC-Insured?

CDs are considered very safe because they're insured by the Federal Deposit Insurance Corp. (FDIC) for bank-issued CDs or the National Credit Union Administration (NCUA) for CDs opened at credit unions, known as share certificates.

Both agencies cover up to $250,000 per depositor, per institution and per account category. That means if you have a CD in your name at a single bank, you're covered up to that limit even if the bank fails. But if your total deposits at that bank go over $250,000 and they're all in the same type of account, the extra money isn't protected.

You can increase your coverage above the $250,000 threshold by using different account types. For example, you could keep $250,000 in a CD under your name and another $250,000 in a joint CD with your spouse. Both would be fully insured because they fall under separate account types.

Spreading your savings across more than one bank or credit union is another way to increase your coverage. Each institution offers its own $250,000 limit, so dividing your deposits can keep all your money insured.

Tip: The FDIC offers an Electronic Deposit Insurance Estimator (EDIE) tool to help you calculate the coverage on your deposit accounts, including savings, checking, CDs and money market accounts at FDIC-insured banks.

What Happens if Your Bank or Credit Union Fails?

Bank collapses are rare, but they do still happen. Since 2023, eight banks have failed in the United States, including one (Pulaski Savings Bank) in 2025, according to the FDIC. By contrast, there were 510 bank failures between 2007 and 2014, during the Great Recession and its aftermath.

Fortunately, if your bank or credit union fails, your deposits are protected up to $250,000 per depositor, per insured institution, per account category, as long as the bank or credit union is backed by the FDIC or NCUA. The federal government has never failed to cover deposits at a failed bank or credit union insured by the FDIC or NCUA. In most cases, the government moves quickly to arrange a sale to another institution or to send checks for the insured amount.

It's worth noting that if your bank is taken over by another institution, your original account contract is no longer valid. The new bank doesn't have to honor the rate or terms you agreed to when you opened the CD. In that case, you're allowed to withdraw your money without paying an early withdrawal penalty. You can reinvest it in a new CD or keep the funds.

Learn more: What Happens to Your Money if Your Bank Fails?

Can You Lose Money in a CD?

A $10,000 CD at 4.00% annual percentage yield (APY) will earn about $400 in interest over one year if you don't withdraw funds early. That certain return on money is what attracts savers to CDs. But while CDs are generally predictable and safe, there are still a few ways you could lose money, including:

• Withdrawing funds early: The most common way to lose money is by pulling your funds before the CD matures. These penalties can range from 60 days of interest to a year or more of interest you've earned. Generally, longer CDs come with higher penalties.
• Exceeding insurance limits: FDIC and NCUA insurance protects up to $250,000 in each account category at a single bank or credit union. If you deposit more than that at one bank and it fails, anything over the limit may not be reimbursed.
• Opening a CD at an uninsured institution: Not every bank or credit union is federally insured. If you open a CD at an institution that isn't backed by the FDIC or NCUA and it fails, you could lose all of your deposit. For example, state-chartered credit unions may not offer deposit insurance because they are regulated by the state, not the NCUA. There are other exceptions as well, so verify a financial institution is federally insured before opening a CD account. See tools below.

Tip: One way to avoid early withdrawal penalties and improve flexibility is by creating a CD ladder. You spread out your savings across several CDs with different terms so they don't all mature at the same time. That way you continue to enjoy fixed returns while having regular access to your maturing funds.

Learn more: When Does It Pay to Withdraw Your CD Early?

How to Choose a Safe CD

Before you open a CD, it's important to confirm the bank or credit union is federally insured so you don't put your money at risk. You can do that by using the FDIC's BankFind tool for banks or the NCUA's Credit Union Locator for credit unions.

You'll also want to check the bank's reputation, especially if it's an online-only provider you haven't heard of. Look it up on sites like Trustpilot or the Better Business Bureau, and search for any regulatory actions or news coverage involving the bank.

Before opening a CD, make sure you understand its terms, including its early withdrawal penalty and any minimum deposit requirement.

Build and Maintain Strong Financial and Credit Health

If your emergency savings is fully funded and you have extra money you won't need anytime soon, adding CDs to your portfolio could be a wise move. You'll earn a fixed, guaranteed return that isn't affected by the ups and downs of the stock market. You can even stagger your deposits with a CD ladder to allow periodic access to your funds. Just be sure to protect your savings by opening your account at a federally insured bank or credit union.

Having an emergency fund and stashing some in savings creates a strong foundation for your financial health. Don't forget to also focus on your credit health. A good credit score can help you get approved for credit that can help you achieve important goals like owning a home or paying for higher education. Experian provides helpful tools, including free credit monitoring, to support you in building and maintaining strong credit.