I’ve lost count of how many people think the FDIC and SIPC do the same thing—just with different letters. Spoiler: they absolutely don’t. But honestly, I get the confusion.
On the surface, they’re both financial safety nets. Both exist to protect your money. And both feel like acronyms that should come with tiny legal print and an optional nap.
But knowing the real difference between FDIC and SIPC protection isn’t just a flex at dinner parties—it’s genuinely useful. Especially if you’re saving, investing, or just trying to be a little more money-smart without spiraling into a Google hole.
Let’s untangle the two—clearly, calmly, and with zero jargon overload.
What Is FDIC Insurance?
Let’s start with the acronym you’ve probably seen on a bank branch window or your checking account welcome email. FDIC stands for Federal Deposit Insurance Corporation. It’s been around since 1933 (a post-Great Depression move to rebuild trust in U.S. banks) and it’s backed by the full faith and credit of the U.S. government.
Here’s what that means in real life:
If your bank fails—and yes, that still happens—FDIC insurance protects your money up to $250,000 per depositor, per bank, per ownership category.
So if you have a savings account, checking account, or a certificate of deposit (CD) at an FDIC-insured bank, your funds are safe up to that limit.
Covered by FDIC:
- Checking accounts
- Savings accounts
- Money market deposit accounts (not to be confused with money market funds)
- CDs
- Negotiable Order of Withdrawal (NOW) accounts
- Prepaid cards (in some cases, if they’re held at an FDIC-insured bank)
Not Covered by FDIC:
- Stocks, bonds, mutual funds
- Crypto
- Life insurance policies or annuities
- Municipal securities
- Safe deposit box contents
- U.S. Treasury securities (they’re backed by the Treasury, not FDIC)
So, What’s SIPC Then?
If FDIC is for banks, SIPC is for brokerage firms. It stands for Securities Investor Protection Corporation, and it was formed in 1970 to protect investors if their brokerage goes belly-up.
But—and this is important—SIPC does not protect against investment losses. If your stock drops in value or a fund underperforms, SIPC’s not your safety net. It exists to protect the cash and securities you own in case the firm fails or your assets go missing due to fraud or insolvency.
SIPC covers up to:
- $500,000 total, including up to $250,000 in cash (held in a brokerage account)
SIPC has helped recover over $141 billion in assets for investors since 1970. It’s like a seatbelt—not something you notice when the ride’s smooth, but essential if your brokerage firm swerves into serious trouble.
Covered by SIPC:
- Stocks, bonds, mutual funds
- Cash held in a brokerage account
- Other securities (e.g., Treasury securities, notes, certificates of deposit)
Not Covered by SIPC:
- Commodity futures contracts
- Fixed annuities
- Investment losses due to market fluctuations
- Promissory notes, currency, or crypto (with some exceptions depending on how it's held)
Let’s Put This in Real-Life Terms
Say you’ve got:
- $200,000 in a checking account
- $120,000 in a savings account
- $300,000 in a brokerage account (some in mutual funds, some in cash)
FDIC covers the first two (assuming they’re at the same bank, you’re still within the $250,000 limit). SIPC covers the third (you’re under the $500K cap, including under the $250K cash limit).
But if your investments tank because the market drops? That’s on the market, not SIPC.
If your bank fails and you have a CD there? FDIC’s got your back.
It’s not about which one is better—it’s about where your money lives and what kind of risk it faces.
So… Are You Fully Covered?
Here’s the part most people skip: You might be underinsured or overconfident, depending on how your accounts are structured.
A few smart moves you can make:
- Know your ownership categories: FDIC insurance applies per depositor per account type. So a joint account can get you double the coverage.
- Spread it wisely: If you’ve got more than $250K at one bank, consider opening a second account at another FDIC-insured institution to fully protect it.
- Check your brokerage: Not all firms are SIPC members. Always confirm before moving money.
- Understand your assets: SIPC won’t help if you lose money due to market swings. It’s about access to your assets, not their performance.
What About Apps and Online Fintechs?
Great question—and one I get often.
A lot of us are using digital banks, investing apps, or hybrid platforms that blur the line between banking and investing. So how do FDIC and SIPC work in those cases?
Here’s what to check:
Is your money held at a partner bank? Many fintech apps (like Chime, Betterment, or Wealthfront) partner with FDIC-insured banks to hold your cash. That means you do get FDIC protection, but only if the funds are actually at the partner bank—and only up to FDIC limits.
Is the brokerage SIPC-member certified? Look for this on the platform’s website. If they are, your investments are typically protected under SIPC if they go out of business.
Read the disclosures. Most legit apps will clearly state where your money is held and how it’s insured. If they don’t? That’s a red flag.
The Answer Corner
- FDIC = banks. SIPC = brokerages. Think deposits vs. investments.
- FDIC covers cash-based accounts like checking, savings, and CDs—up to $250,000 per account category, per bank.
- SIPC protects investments (stocks, bonds, mutual funds)—up to $500,000 per customer, including $250K in cash.
- Neither protects market losses. If your stocks drop in value, that’s not an insurance issue.
- Ownership structure matters. You may qualify for more protection depending on how accounts are held (individual, joint, trust, etc.).
Final Thoughts: Protect What You’ve Built
FDIC and SIPC might not be the flashiest parts of your financial plan—but they’re some of the most essential. They’re not about growing your money. They’re about safeguarding it in the rare event that something goes wrong behind the scenes.
Knowing which one covers what helps you be a smarter, more confident saver and investor. It takes the panic out of the “what-ifs” and lets you focus on making clear, grounded financial decisions.
So the next time someone throws around acronyms, or a new banking app tempts you with sleek design and high yields, ask yourself: Is this money protected—and by whom?
Because being money-savvy isn’t about mastering the markets overnight. It’s about understanding the quiet structures that keep your financial life intact, no matter what headlines say.
