Deposit guarantee schemes explained

How deposit guarantee schemes work

If your bank goes under, a deposit guarantee scheme is meant to repay you up to a set limit. In the EU, you’re covered for up to 100,000 euros, and that’s per depositor, per bank. So, if your bank collapses and can't return your money, the scheme steps in within its rules.

Banks chip in regularly to maintain this fund. It’s not funded by the government in normal times, though governments might step in for a crisis. Each EU country runs its own scheme, but they must stick to the EU framework and directive. It's protection for bank failures only. It doesn't apply if your investment loses value or in cases of fraud outside the banking rules.

What kinds of accounts and money are protected

You’re typically covered for everyday deposits, current accounts, savings accounts, or a fixed-term deposit with an EU-authorized bank. Some situations work a bit differently:

• Joint accounts: each holder’s share is covered up to the limit, not the total balance.
• Multiple accounts at one bank: all your balances are added together and protected up to the one limit.
• Temporary high balances: money you get from a property sale, an insurance payout or a redundancy can get extra protection for a set period, usually a few months.

Things like shares, investment funds, bonds and most forms of crypto aren’t covered here. Those are investments, not deposits. Some of those may fall under an investor compensation scheme. Schemes in countries outside the EU will have their own rules and their own currency limits; the UK, for instance, has the Financial Services Compensation Scheme with its limit set in pounds. To see what’s currently covered, check the latest details on that scheme’s website. Limits aren’t permanent so they might change.

What happens when a bank fails and a scheme pays out

If your bank fails, the scheme is required by law to pay you (if you're eligible) within a short time, once the financial authority makes an official announcement. You might be asked to confirm your identity or details, so keep your bank up to date.

Let’s say you have 120,000 euros in a single account. Standard coverage limits repayment to 100,000 euros; the extra 20,000 euros wouldn’t be protected, so that part could be lost. People sometimes keep money in more than one bank to catch the most coverage possible. Payment apps aren’t always banks, so they work differently, see what happens if a payment provider goes bust.

Frequently asked questions