Before you hand over your money, check who's holding it.
The story so far You've decided: checking for spending, savings for setting money aside. Now you have to pick where. Harbor National Bank has a branch by campus. Riverbend Community Credit Union had a table at orientation. Peak, an online bank, pays 3.75% on savings. And your friend swears by Zipcash, an app that pays 4.25% and says "FDIC insured." Your first $600 paycheck lands Friday.
A bank, a credit union or an online bank holds your money. If one fails, deposit insurance pays you back, up to $250,000 per person.
Where you open your account decides your fees, your interest, which ATMs are free, and whether your money is really protected.
Look for "Member FDIC" or "Federally insured by NCUA," compare fees and APY, then bring a photo ID and your Social Security number.
FDIC bank examiners check that banks are safe. Personal bankers open accounts, and compliance analysts verify every new customer's identity.
What you're looking at: a sketch, not data. Deposit insurance works like an umbrella over a bank: if the bank fails, your deposits stay dry, up to $250,000.
Banks, credit unions and online banks hold your money. Not every app does.
First, the three kinds of places you can open an account. Then the insurance that protects them, what it doesn't cover, and how to compare accounts. Every chart uses real data.
Three kinds of places
A bank takes deposits, makes loans, and is owned by shareholders who keep the profit. A credit union does the same jobs, but it's a not-for-profit owned by its members, the customers, who each get one vote. Its profits come back as lower fees and better rates, and to join you have to fit its rules, like living, working or studying in an area. An online bank is a real bank with no branches. Lower costs often mean higher savings rates, but depositing cash is hard.
- Bank
- Harbor National has a branch by campus and 15,000 ATMs, but its savings pays just 0.01% APY. In mid-2026, the U.S. had 4,238 FDIC-insured banks and savings institutions.
- Credit union
- You can join Riverbend because you study in Riverbend County. A $5 share makes you a member-owner. In mid-2026, 4,214 federally insured credit unions had 146.1 million members.
- Online bank
- Peak pays 3.75% APY on savings, but there's no branch where you could deposit cash tips.
- Owned by
- Shareholders
- Profits go to
- The owners
- Insured by
- FDIC
- Strong at
- Branches and ATMs everywhere
- Owned by
- Its members
- Profits go to
- Members, as lower fees and better rates
- Insured by
- NCUA
- Strong at
- Low fees and loan rates
- Owned by
- Shareholders
- Profits go to
- The owners
- Insured by
- FDIC
- Strong at
- Higher savings rates, few fees
Deposit insurance: why bank runs stopped
From 1930 to 1933, about 9,000 U.S. banks failed or shut their doors, and many families lost their savings. So in 1934 the government started deposit insurance: if an insured bank fails, depositors get paid back, up to a limit. Banks are insured by the FDIC, the Federal Deposit Insurance Corporation. Credit unions are insured by the NCUA, the National Credit Union Administration, with the same $250,000 limit. The FDIC says no one has lost a penny of insured deposits since it began. Tap a year.
- Deposit insurance
- Coverage started in 1934 at $2,500 per depositor. Today it's $250,000, so your $600 paycheck and $300 of savings are covered in full.
- FDIC
- Washington Mutual failed in September 2008 with $307 billion in assets, the largest bank failure in U.S. history. Another bank took it over, and customers kept using their accounts.
- NCUA
- Riverbend's door says "Federally insured by NCUA." Your savings there are covered up to $250,000, the same as at a bank.
What you're looking at: real data. Each bar is the number of FDIC-insured banks and savings institutions that failed that year, 1934 to 2025, from the FDIC through the St. Louis Fed's FRED database. The tall bars in the late 1980s are the savings and loan crisis. Through every one of these failures, the FDIC says no depositor lost a penny of insured money.
How much is covered
The $250,000 limit is per depositor, per insured bank, per ownership category, meaning how the account is owned. An account in only your name is one category. A joint account, owned by two or more people, is another, and each co-owner's share is covered up to $250,000. Money over the limit is uninsured. Slide the amount and change how it's held.
- Ownership category
- $260,000 in one savings account in your name at Harbor: $250,000 is covered.
- Uninsured
- The other $10,000. When Silicon Valley Bank failed on March 10, 2023, after customers tried to pull out $42 billion in one day, about 94% of its deposits were over the limit. The government chose to cover them with a special exception, but it doesn't have to.
- Joint account
- You and a parent share $400,000. Each of you is covered up to $250,000, so up to $500,000 is covered and all of it is safe.
What you're looking at: a calculator using the real FDIC and NCUA rule of $250,000 per depositor, per bank, per ownership category. Each bar is one bank; the dashed line marks the limit for that account. Splitting across banks puts half at each.
What deposit insurance doesn't cover
Deposit insurance covers deposits: checking, savings, money market deposit accounts and certificates of deposit. It doesn't cover investments, even ones you buy through a bank: stocks, bonds, mutual funds, crypto, annuities, or what's in a safe deposit box. And it doesn't cover a company that isn't a bank. Many money apps are fintech companies that keep your money at a partner bank. If that bank fails, you can be covered. If the app fails, or loses track of whose money is whose, the FDIC doesn't pay.
- Fintech
- Zipcash's fine print says it's "a financial technology company, not a bank." Its 4.25% is paid by its partner bank, Lakeview Bank.
- Partner bank
- In 2024, Synapse, a company connecting apps like Yotta to partner banks, collapsed. A court-appointed trustee found up to $96 million of customer money missing, and the FDIC said its insurance doesn't cover a nonbank failing. One saver with $282,153 in the app was offered $500.
- Not insured
- In 2022, Celsius, a crypto company advertising double-digit yields, froze withdrawals in June and filed for bankruptcy in July. Crypto has no deposit insurance.
Compare the whole account
Once your money is protected, compare what each account costs and earns. Three things matter most: the monthly maintenance fee and how to get it waived, ATM fees, and the savings APY. Set your own habits and see the yearly total for each place.
- Monthly maintenance fee
- Harbor charges $12 a month unless you get at least $500 a month by direct deposit or keep $1,500 in checking. Your $600 paychecks clear the bar, so you'd pay $0. In Bankrate's 2025 study, 95% of checking accounts were free or could be with direct deposit.
- ATM fees
- Using an ATM your bank doesn't own cost $4.86 on average in 2025: $3.22 to the ATM's owner plus $1.64 to your own bank.
What you're looking at: a calculator with made-up but typical account rules. Harbor charges $12 a month unless you have $500 of direct deposit or $1,500 in checking, and $3.00 plus the ATM owner's fee at other ATMs; savings pays 0.01%. Riverbend has no monthly fee, charges $1.00 plus the owner's fee, and pays 0.50%. Peak has no fees, refunds up to $10 a month of ATM owner fees, and pays 3.75%. The ATM owner's fee uses the 2025 average of $3.22.
What you need to open one
By law, a bank must confirm who you are before you open an account. Many also look you up in ChexSystems, a reporting company that tracks trouble with past bank accounts. If a bank says no, look for a Bank On certified account, built for people starting out or starting over.
- ChexSystems
- If you left an old account $85 overdrawn and never paid it, ChexSystems can report it for up to five years, and a new bank may turn you down.
- Bank On
- A Bank On account has no overdraft fees, a monthly fee of $5 or less (or up to $10 if it's easy to waive), and an opening deposit of $25 or less.
- A government photo ID
Driver's license, state ID or passport.
- Your Social Security number
Or an ITIN, a tax ID number for people without one.
- Your address and date of birth
Where you live now, even if it's a dorm.
- An opening deposit
Often $0 to $25. Riverbend's is the $5 membership share.
- Under 18?
Most banks need a parent or guardian to open it with you, as a joint owner.
Two minutes. Just listen.
Tap any line to jump to it.
Fine print detective.
Six offers want your money. For each one, read the ad and its fine print, then decide: if this company failed tomorrow, who would protect your money? Your score counts the ones you get right on the first try.
What you're looking at: six made-up ads written like real ones. The companies are invented, but the fine print follows real wording rules, and the stories in the answers, Synapse in 2024 and Celsius in 2022, really happened.
The logic, step by step.
Four calculations answer "is my money safe?" and "which account is cheaper?"
Step 1: How much is covered at one bank
For one ownership category at one bank, coverage is the smaller of your balance and $250,000 for each owner.
- Just you
- $260,000 balance, 1 owner: smaller of $260,000 and $250,000 = $250,000.
- Joint
- $400,000 balance, 2 owners: smaller of $400,000 and $500,000 = $400,000.
Step 2: How much is at risk
Subtract what's covered from the balance.
- Just you
- $260,000 − $250,000 = $10,000 at risk.
- Split across 2 banks
- $130,000 at each, both under $250,000: $0 at risk.
Step 3: What savings earns
Multiply the balance by the APY, written as a decimal.
- Peak, 3.75%
- $1,000 × 0.0375 = $37.50.
- Harbor, 0.01%
- $1,000 × 0.0001 = $0.10.
Step 4: What an account really costs in a year
Add up a year of fees, then subtract the interest you earn.
- Harbor, no direct deposit
- 12 × ($12 + 2 × $6.22) − $0.10 = 12 × $24.44 − $0.10 = $293.18 a year.
- Peak
- 12 × ($0 + $0) − $37.50 = −$37.50: you come out $37.50 ahead.
Worked example: picking a home for your $600 paychecks
- Check the protection. Harbor and Peak say "Member FDIC." Riverbend says "Federally insured by NCUA." Zipcash says "not a bank," so its insurance only covers its partner bank failing.
- Set your habits. $400 usually in checking, $1,000 in savings, direct deposit of $1,300 a month, and 2 trips a month to ATMs your bank doesn't own.
- Harbor. Direct deposit waives the $12 fee. ATMs: 12 × 2 × ($3.00 + $3.22) = $149.28. Interest: $0.10. Cost: $149.18 a year.
- Riverbend. ATMs: 12 × 2 × ($1.00 + $3.22) = $101.28. Interest: $1,000 × 0.005 = $5.00. Cost: $96.28 a year.
- Peak. Owner fees of 2 × $3.22 = $6.44 a month are under the $10 refund. Interest: $37.50. You come out $37.50 ahead.
- Decide. Peak wins on money. But if you get paid in cash tips, you'd need a place to deposit cash, and Riverbend's branch might be worth $96 a year to you. Or use Riverbend for checking and Peak for savings.
Emperor penguins huddle so no one freezes alone.
In the Antarctic winter, with temperatures far below freezing and fierce wind, emperor penguins press together in huddles of hundreds or even thousands. Inside a tight huddle, it can get warmer than 20°C (68°F). The birds keep shuffling, so the ones on the cold edge take turns moving in.
What you're looking at: an illustration, not data. A huddle of emperor penguins shelters together while one penguin stands alone in the wind.
Why this sticks. Deposit insurance works like the huddle. Every insured bank pays premiums into one shared pool, the FDIC's Deposit Insurance Fund. When one bank fails, the pool keeps its depositors warm. Step outside the huddle, into an app that isn't a bank or a crypto account, and you face the wind alone.
The page you'd copy down.
- Bank: owned by shareholders. Credit union: not-for-profit, owned by its members. Online bank: a real bank with no branches, often higher APY.
- Deposit insurance: since 1934. FDIC for banks, NCUA for credit unions, up to $250,000 per depositor, per bank, per ownership category.
- Joint account: each co-owner covered up to $250,000. Money over the limit is uninsured.
- Covered = the smaller of balance and $250,000 × owners. Uninsured = balance − covered.
- Not covered: stocks, bonds, funds, crypto, annuities, safe deposit boxes, or a fintech app failing. Apps are covered only if their partner bank fails.
- Compare the monthly maintenance fee and its waiver, ATM fees (2025 average $4.86), and APY. Yearly cost = fees − interest.
- To open: photo ID, SSN or ITIN, address, date of birth, opening deposit; under 18, a parent joins. Banks check ChexSystems; Bank On accounts help people starting over.
Fill in the blanks
Grab a friend or a study group.
Sticker hunt
Each of you picks a money app you use. Scroll to the bottom of its website and find the fine print: is it a bank, and if not, who's its partner bank?
Bank vs. credit union
Split into two sides. One argues for a big bank, the other for a local credit union, for a student who gets paid in cash tips and travels home twice a year.
Coverage quiz-off
Take turns making up a situation, like "$300,000 in a joint account with Mom," and race to say how much is covered and how much is at risk.
Just you and your money.
These stay on this device. Nobody else sees them.
Exam-style questions.
Written the way a college exam would ask them. Each right answer on the first try is worth 10 xp.
On the job: you're the personal banker
You work at Riverbend Community Credit Union. A member, Grace Kim, 58, just sold her house and has $410,000 sitting in one savings account in her name only. She asks you, "Is all of this safe if the credit union fails?" She's married, and her husband is also a member.
Your task: work out how much is insured and how much is at risk. Then suggest two ways she could get all of it covered.
See a model answer
The numbers: one owner, one credit union: covered = the smaller of $410,000 and $250,000 = $250,000. Uninsured = $410,000 − $250,000 = $160,000 at risk.
Option 1, a joint account: if she and her husband move money into a joint account, each co-owner is covered up to $250,000, so the joint account is covered up to $500,000, and that's a separate category from her single account. Moving $160,000 or more into it covers everything. It also makes her husband a co-owner, so it's a decision for both of them.
Option 2, a second institution: move at least $160,000 to another FDIC-insured bank or NCUA-insured credit union. Each place covers her up to $250,000.
To double-check: the NCUA's Share Insurance Estimator and the FDIC's EDIE tool calculate coverage for real accounts.
From a safe place to keep money to everything you'll do with it.
What you're looking at: a map of where this lesson fits in the course. Read it left to right: the lesson that comes before, this lesson in the middle, and the later lessons that build on it.
- Before · Unit 1Where your money lives
- You are hereYour first account
- Next · Unit 1Dodge the fees
- Later · Unit 3Make your savings earn more
- Later · Unit 5Open a brokerage account