bank fails

Banks are Failing… Is Your Money Safe?

Banks are failing…is your money safe? The recent failures of both the Silicon Valley Bank and Signature Bank in New York have led to many Americans being concerned. Now, this concern is natural. If something similar happens to your bank, how safe is your money?

Well, we’d like to reassure you: Generally, money kept in a bank account is safe. However, this depends on several factors. These include your balance amount and the specific type of account, as not all are protected. For example, Silicon Valley Bank likely had billions in uninsured deposits.

Fortunately, there are some things you can do to increase the safety of the money you have in the bank. In today’s post, we’ll share some important information, including tips on how to do this. We believe that, you should always be able to have financial stability and safety. And, we can assure you, this is possible.

Now, to start, it’s important that you understand the following: When you make a deposit to the bank, most of your money is not actually held onto. Capital requirement is only around 10%, according to the Federal Reserve. As soon as you make a deposit, around 90% of that money is given away by the bank as a loan. As long as there isn’t a run on the bank, though, there won’t be any problems.

Bank Runs

A run on a bank occurs when a larger number of people, all at once, try to withdraw money from a bank. In this scenario, the bank is unable to fulfill all of their requests at once, resulting in a bank failure. This scenario does happen. But, how often does it?

Bank runs don’t necessarily signal economic instability. Typically, a few happen per year anyway. This info comes from reports by the Federal Deposit Insurance Corporation, or FDIC. There weren’t many bank failures during 2021 or 2022. But, obviously, that stroke has now been broken. And, considering banks going under is a common occurrence during a recession, things may get worse.

What You Can Do

When a bank collapses, the FDIC does cover losses. After this, they hand everything over to a different institution. You might notice that all of a sudden, your bank has changed names. This is because it’s not the same organization anymore. However, the FDIC can fall short, resulting in very noticeable losses for you. For example, they can end up falling short in event of multiple banks failing at once. This happened during the last recession.

There are, however, a few measures you can take to make sure your savings are protected from bank failures. Here are a few tips for what you can do.

Firstly, you should make sure you’re banking at an FDIC-insured institution. not all institutions, or even all banks, are insured by the FDIC. If your bank is covered by them, deposits of up to $25,000 are insured. If you have more than that, rest assured, you can still get additional coverage. You can do this just by opening up a different type of account at that same bank, or by opening an account at a different bank altogether.

If you have deposits resting in a non-FDIC-insured bank, this puts your money at risk in the event of a bank failure. You should check whether or not your bank is FDIC-insured. You can look it up on the FDIC’s BankFind Suite Page.

Get Educated

It’s important that you stay updated about the health of your bank. Aside from knowing whether or not it’s FDIC-insured, you should keep up with the news surrounding your bank. This way, you can be aware of any problems that might affect you, and take steps to protect your money in advance.

It’s also important that you know the FDIC’s limits. Not only do they only cover deposits of up to $25,000, but they only cover your money in certain ways.

The FDIC doesn’t cover losses due to fraud and identity theft. This is important to know, as it’s become a big problem in recent years. Additionally, the FDIC can’t protect you from losses if you invest directly in a bank’s stock. And, they don’t insure the money in your account at your credit union. However, credit unions are insured by the National Credit Union Share Insurance Fund. Additionally, they are insured at the same level.

And, the FDIC, or any other government organization, for that matter, won’t help you if your safe deposit box gets broken into. However, you can get private insurance on those. (And, if you’re looking for a safer place to stash some of your money away, we might be able to help.)

In conclusion, it’s important to remember that you’ll most likely be okay, even if your bank fails in the same way Silicon Valley Bank and Signature Bank did. However, it’s still important that you do your research. It pays to know more about your bank than just its name.

We Can Help

If financial stability is a big concern of yours, you aren’t alone. With the possibility of a recession on the horizon, many people are looking for ways of keeping the money they’ve worked hard to earn safe. And, that’s where we come in! If you’re looking for more financial stability, you can reach out to us. Our services may be of use to you if you’re looking for option to stay safe for the long haul. Contact us to learn more.

Sources: Forbes, GoBankingRates.

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top