Is Your Fintech Really FDIC Insured?
That "FDIC Insured" badge might not mean what you think. After the Synapse collapse left 100,000+ users frozen out of their accounts, here's how to verify your money is actually protected.
⚡ The Quick Answer
"FDIC insured" at a fintech app means your money is held at an FDIC-insured partner bank. But if the fintech or its middleware provider fails—not the bank itself—your funds could be frozen in bankruptcy court for months or years. The FDIC only covers bank failures.
The safest option: Keep serious savings at actual banks, not apps.
The Three Types of "FDIC Insured"
When a company says "FDIC insured," they could mean three very different things:
You have an account directly with an FDIC-insured bank. No middlemen.
Examples: Ally Bank, Marcus by Goldman Sachs, Discover Bank, American Express National Bank
✓ Full FDIC protection up to $250,000
The fintech partners directly with an FDIC-insured bank, no middleware layer.
Examples: Chime (Bancorp/Stride), Current (Choice Financial)
⚠️ FDIC covers the bank—but if the fintech fails, you may face delays accessing funds
A middleware "Banking-as-a-Service" company sits between the fintech and the bank.
Example: Yotta, Juno, Copper (all used Synapse → Evolve Bank)
❌ If middleware fails, funds can be frozen indefinitely—even if the bank is fine
The 5-Step Verification Process
Don't trust marketing. Verify. Here's exactly how:
Step 1: Find the Actual Bank Name
Look for disclosure language in the app or website. Search for:
- "Banking services provided by..."
- "Deposits held at..."
- "Member FDIC through..."
Usually this is buried in the footer or a "Legal" page. If you can't find it easily, that's your first red flag.
Example (Chime): "Banking services provided by The Bancorp Bank, N.A. or Stride Bank, N.A., Members FDIC."
Step 2: Verify the Bank on FDIC.gov
Go to FDIC BankFind and search for the bank name.
Look for:
- Active status — The bank should show as currently operating
- FDIC Certificate Number — This confirms FDIC membership
- Insured deposits — Confirms they hold customer deposits
✓ Good sign: Bank appears in BankFind with active status and FDIC certificate number
Step 3: Check for Middleware/BaaS Providers
This is the critical step most people skip. Search Google for:
- "[App name] banking partner"
- "[App name] BaaS provider"
- "[App name] Banking-as-a-Service"
- "[App name] Synapse" (or other known BaaS providers)
Known Banking-as-a-Service providers include:
- Synapse Financial — Collapsed in 2024, avoid anything still connected
- Unit — Partners with multiple banks
- Treasury Prime — Partners with multiple banks
- Galileo — Major processor, owned by SoFi
- Marqeta — Card issuing platform
⚠️ Red flag: If there's a middleware provider between the app and the bank, your funds face additional risk if that middleware provider fails.
Step 4: Understand Your Account Structure
Look for how your account is actually held. The safest structure is an "FBO" (For Benefit Of) account where your name is directly associated with funds at the bank level.
Warning signs:
- Vague language about "pooled accounts"
- No clear explanation of how deposits are held
- Multiple layers between you and the bank
Step 5: Test Withdrawal Speed
Before depositing significant funds, test:
- Can you withdraw to an external bank account?
- How long does the transfer take?
- Are there any withdrawal limits?
If withdrawals are slow, limited, or require multiple approval steps, that's concerning.
The Fintech Safety Scorecard
Use this quick reference to assess any app:
| Factor | Safe ✓ | Risky ⚠️ |
|---|---|---|
| Company Type | Actual bank with charter | Fintech app + partner bank |
| Middleware | None (direct to bank) | BaaS provider involved |
| Bank Disclosure | Clear, prominent | Buried, vague |
| FDIC Certificate | Verifiable on FDIC.gov | Can't verify/find |
| Company Age | 5+ years, profitable | Startup, burning cash |
| Withdrawal Speed | Same-day or next-day | 3-5 days or limits |
Our "Verified Safe" List
These institutions are actual FDIC-insured banks with no middleware layer. Your account is directly with the bank:
Fintechs with Their Own Bank Charters
These started as fintechs but obtained their own banking licenses, eliminating the partner bank risk:
What to Do If You're Worried About Your Current Account
If your savings are at a fintech you're now questioning:
- Don't panic. Most fintechs are operating normally. The Synapse situation was a specific failure.
- Run the verification steps above. Understand your actual risk level.
- Consider diversifying. Don't keep all your savings in one place—especially if it's a newer fintech.
- Keep enough at a traditional bank for emergencies. At minimum, have 1-2 months of expenses somewhere you can access immediately.
- If transferring, do it gradually. Large sudden withdrawals can trigger fraud alerts or delays.
The Bottom Line
"FDIC Insured" is not a magic shield. It's specific protection against a specific risk (bank failure), and it doesn't protect you from every way you could lose access to your money.
For serious savings—emergency funds, down payment savings, retirement reserves—we strongly recommend actual banks with their own FDIC charters. Save the flashy fintech apps for fun money and convenience features.
Your financial security is worth the extra 0.1% APY you might lose by going with an established bank instead of the newest startup.
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