How to keep your money safe

The recent failures of Silicon Valley Bank and Signature Bank, which mainly supplied the tech industry, may have you worried about your money. They were the second and third largest bank failures in US history.

It all started last week when too many depositors tried to withdraw their money from Silicon Valley Bank in Santa Clara, California. That is known as a bank run.

The bank had to sell treasuries and other securities at a huge loss and more people kept trying to withdraw money as word of the situation spread, causing the bank to fail. Regulators took control of New York-based Signature Bank soon after, saying depositors needed to be protected after too many people withdrew money.

In response, regulators guaranteed all deposits at the two banks and created a program to help protect other banks from a run on deposits.

Bank Collapsing Startups

Security guards allowed people into the Silicon Valley Bank headquarters in Santa Clara, California, on March 13. Associated Press

Here’s what you need to know:

Is my money safe?

Yes, if your money is in a bank insured by Federal Deposit Insurance Corp. and you have less than $250,000 there. If the bank fails, you will get your money back.

Almost all banks are insured by the FDIC. You can look for the FDIC logo at bank teller windows or at the entrance of your bank branch.

Credit unions are insured by the National Credit Union Administration.

If you have more than $250,000 in individual accounts at a bank, which most people don’t, more than $250,000 is considered unsecured and experts recommend moving the rest of your money to another financial institution, Caleb Silver said. , editor-in-chief of Investopedia, a financial media website.

If you have multiple individual accounts at the same bank, for example, a savings account and a certificate of deposit, they are added together and the total is insured up to $250,000.

Federal officials have been taking steps to make sure other banks are not affected.

“You shouldn’t worry too much about your money if you’re at one of the bigger banks, and even some of the regional banks and credit unions,” Silver said.

What is the FDIC?

The FDIC is an independent federal agency created in the midst of the Great Depression, the greatest economic crisis in modern history.

The crisis led to public demand for the protection of their bank deposits. The Banking Act of 1933, which established the FDIC, was signed into law by President Franklin D. Roosevelt on June 16, 1933.

The FDIC insures deposit products, including checking and savings accounts, money market deposit accounts, and certificates of deposit.

“In the 90-year history of the FDIC, no one has ever lost a penny of their insured deposits,” according to FDIC spokesman Brian Sullivan.

How do I know if my bank will fail?

If you’re worried about your bank closing in the near future, there are a few things to keep in mind, according to Silver:

• Keep an eye on your bank’s share price.

• Keep an eye on your bank’s quarterly and annual reports.

• Start a Google Alert for your bank in case there is news about it.

You want to make sure you pay close attention to how your bank behaves, Silver said.

“If they’re trying to raise money through a stock offering or if they’re trying to sell more shares, they may have balance sheet issues,” Silver said.

Should I look for alternatives?

If you have more than $250,000 in your bank, there are a few things you can do:

Open a joint account

You can protect up to $500,000 by opening a joint account with someone else, such as your spouse, said Greg McBride, chief financial analyst at Bankrate, a financial services company.

“A married couple can easily protect a million dollars in the same bank if they each have an individual account and together they have a joint account,” McBride said.

Move to another financial institution

Moving your money to other financial institutions and having up to $250,000 in each account will ensure your money is FDIC insured, McBride said.

do not withdraw cash

Despite the recent uncertainty, experts do not recommend withdrawing cash from your account. Keeping your money in financial institutions rather than at home is safer, especially when the amount is insured.

“This is not the time to take your money out of the bank,” Silver said.

Even people with uninsured deposits usually get almost all their money back.

“It takes time, but generally all depositors, both insured and uninsured, get their money back,” said Todd Phillips, a consultant and former FDIC attorney. “Uninsured depositors may have to wait some time and may have to get a haircut where they lose 10 to 15% of their savings, but it’s never zero.”

How long does it take for the insured money to be available if a bank fails?

Historically, the FDIC says it has returned insured deposits within days of a bank closing. The FDIC will provide that amount in a new account at another insured bank or write a check.

How much money can be secured in joint accounts?

If you have a joint account, the FDIC covers each individual up to $250,000. You can have individual and joint accounts at the same bank and be insured for each.

So if a couple has individual accounts and a joint account where they have equal withdrawal rights, they can each have up to $250,000 secured in their individual accounts and up to $250,000 in their joint accounts. That means each of them will have up to $500,000 insured.

What about other investments?

Clients should look closely at the types of investments they have with their bank to learn how many of their assets are FDIC-insured. The FDIC offers an Electronic Deposit Insurance Estimator, a tool to find out how much of your money is insured by a financial institution.

FDIC deposit insurance covers:

• Reviewing accounts

• Negotiable order of withdrawal (NOW) accounts

• Keeping accounts

• Money Market Deposit Accounts (MMDA)

• Certificates of Deposit (CDs)

• Cashier’s checks

• Payment orders

• Other official items issued by an insured bank

FDIC deposit insurance does not cover:

• Inversions in actions

• Investments in bonds

• Investment funds

• Life insurance policies

• Annuities

• Municipal titles

• Safe deposit boxes or their contents

• US Treasury Bills, Bonds or Notes.

• Crypto assets

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