FDIC vs SIPC: Which Account Protection Applies?

FDIC insurance applies to eligible deposits at insured banks, generally up to $250,000 per depositor, per insured bank, per ownership category. SIPC addresses missing customer cash and securities when a member brokerage fails, with protection up to $500,000 including a $250,000 cash limit, subject to its rules. These are different systems. A familiar financial app can offer bank deposits, brokerage assets and other products through different legal entities. Read the account agreement rather than treating the app logo as the protection.

SIPC does not guarantee the market value of an investment or compensate for ordinary investment losses. FDIC deposit insurance does not insure stocks or mutual funds merely because a bank sells them. For a hypothetical household, a falling bond fund and a failed bank deposit require different questions. Record the product type, custodian and applicable protection before comparing balances. The word cash on a dashboard can also require closer examination of how that cash is held.

Brokerage cash may be swept into partner-bank deposits or placed in a money market fund, depending on the program. Ask for the current destination banks, ownership records, program limits and treatment of deposits you already hold at those same banks. Do not add advertised limits across several apps without checking overlap. Keep the program disclosure and periodically confirm where the balance is allocated, especially after a provider changes partner institutions or account terms.

Build a private list with account title, institution, product, balance and relevant ownership category. Verify bank membership with FDIC resources and brokerage membership with SIPC. Include joint, trust or business arrangements only under the applicable rules; account labels alone may not establish a separate category. Reconcile the inventory after a large transfer or a merger. The purpose is to understand exposure and access, not to select investments solely by a protection acronym.