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They can easily set up accounts so that they earn lower (or no) interest over $250k, or do what Apple is doing with Apple Card savings and not even allow balances over $250k. Then the bank is effectively passing on the fee to only those unwise enough to keep more than $250k in a account.

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Sure, but FDIC insurance is per depositor, per insurable account category, per institution. Someone with three different savings accounts at the same institution each with less than $250k individually but more than $250k total still only gets $250k in insurance.

EDIT: I'm not saying the system can't, for a lack of a better word, be gamed, but ultimately that requires action on the depositors end, not necessarily the bank(s).

EDIT 2: Which means that any balance over that 250k in the same category would, in theory, count towards an institution's uninsured deposit balance.

If bank reduce interest rates above $250k, it gives incentive for the depositor to use multiple banks. There could also be startups that automatically distribute deposit >$250k to 1000s of bank automatically.

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