Banking Over $250K? 6 Best Ways To Insure Your Money (2024)

jk78 / Getty Images/iStockphoto

Commitment to Our Readers

GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.

20 Years
Helping You Live Richer

Reviewed
by Experts

What To Do if You Have More Than $250K in the Bank?

Securing full protection for bank balances that surpass the $250,000 FDIC limit calls for a deliberate and diversified approach. The key is to extend your insurance coverage while reducing potential risks. Achieving this involves spreading investments across various accounts and financial platforms, utilizing safe investment vehicles and considering alternatives such as credit unions and brokered CDs. Here are some of the most effective strategies to guarantee the safety of your substantial savings.

Spread Your Funds Across Multiple Accounts

One of the simplest strategies to ensure full FDIC coverage is to distribute your funds across various accounts. By opening an account in different ownership categories — such as individual accounts, joint accounts, retirement accounts and trust accounts — you can enjoy FDIC insurance on up to $250,000 for each category at the same bank.

Open Accounts at Multiple Banks

Expanding your banking relationships to include multiple financial institutions can significantly increase the amount of your insured deposits. Placing funds in checking accounts, savings accounts or CD accounts across different banks ensures each account is independently insured up to $250,000.

Consider Credit Unions

Credit unions offer a similar protection mechanism through the National Credit Union Administration, insuring up to $250,000 per depositor, per credit union, for each account ownership category. Opting to open an account with a credit union can be another avenue to insure additional funds.

Invest in Short-Term Investments

For those looking to both protect and potentially grow their funds, exploring short-term investments outside of traditional bank accounts may be a viable option. Money market funds, Treasury bills and short-term bonds offer investment opportunities with varying degrees of risk and liquidity, allowing you to diversify your portfolio beyond insured deposit accounts.

Use Brokered CD Accounts

Brokered CDs can be purchased through brokerage firms and, depending on the issuer, are generally insured by the FDIC up to $250,000. Since brokered CDs are sold by various banks through the brokerage, you can effectively increase your FDIC insurance coverage by purchasing CDs from different banks within your brokerage account.

Utilize Annuities

Annuities, financial products sold by insurance companies, can be another way to insure money beyond what’s covered by FDIC. While not a traditional deposit and thus not covered by FDIC, fixed annuities offer a steady return over time and are protected by state guaranty associations up to certain limits. This makes them a viable option for safeguarding additional funds, especially for those seeking stable, long-term investment returns with a measure of insurance against loss.

Final Take

For those holding more than $250,000 in their bank accounts, securing comprehensive protection for their wealth is essential for maintaining financial stability. Embracing various strategies to ensure every dollar is insured beyond the standard FDIC limits is key. This might involve exploring different banking institutions, considering safer investment avenues and looking into options like credit unions for additional peace of mind. It’s vital to weigh the implications of each choice in terms of accessibility, risk and potential yield to align with your overarching financial objectives and requirements.

FAQ

Here are the answers to some of the most frequently asked questions about banking over $250,000.

What happens if you have over $250,000 in a bank?
- If you have a large amount of money in a single financial institution, and it's all in one ownership category, amounts above the $250,000 limit are not covered by FDIC insurance. This means that in the unlikely event of a bank failure, any amount exceeding the insured limit may not be protected or returned to you by the FDIC. It's essential to diversify your holdings or use other strategies to ensure all your funds are insured.
Where do millionaires keep their money if banks only insure up to $250,000?
- Millionaires often diversify their wealth across multiple financial institutions and investment vehicles to ensure their money is fully protected and working for them. This can include the following:
  - Spreading funds across several bank accounts to maximize FDIC coverage.
  - Investing in stocks, bonds and real estate.
  - Using brokerage accounts that offer SIPC insurance.
- Additionally, many turn to private banking or wealth management services offered by institutions known for working with high-net-worth individuals.
How do I protect my deposits over $250,000?
- To protect deposits over $250,000, consider the following strategies:
  - Spread your funds across multiple banks to ensure each account falls within the FDIC-insured limit.
  - Open accounts in different ownership categories -- individual, joint, trust, etc. -- at the same bank, as each category is insured up to $250,000.
  - Consider credit unions, which offer similar insurance through the NCUA.
  - Look into brokerage accounts with SIPC protection for investment accounts.
  - Invest in Treasury securities, which are backed by the U.S. government and not subject to the same insurance limits as bank deposits.
What bank do most millionaires use?
- Most millionaires use banks that offer private banking or wealth management services. These services not only provide the usual banking features but also offer personalized financial advice, investment management and access to exclusive financial products. Banks like J.P. Morgan Private Bank and Goldman Sachs are known to cater to high-net-worth individuals and families. These institutions understand the unique needs of wealthy clients, including how to manage and protect large sums of money.

Editor's note: This article was produced via automated technology and then fine-tuned and verified for accuracy by a member of GOBankingRates' editorial team.