The recent failures of Silicon Valley Bank and Signature Bank, which mainly focused on the technology industry, may have you worried about your money. These were the second and third largest bank failures in US history.
After too many depositors tried to withdraw their money from Silicon Valley Bank in Santa Clara, California — known as the bank run — regulators took over the bank on March 10.
Regulators took control of New York-based Signature Bank soon after, saying it needed to protect depositors after too many people began withdrawing money.
Regulators also guaranteed all deposits at the two banks and created a program to protect other banks from a flood.
Here’s what you need to know:
Is my money safe?
Yes, if your money is in a bank licensed by the Federal Deposit Insurance Corp. is insured. is insured and you have less than $250,000 in it. If the bank goes bankrupt, you get your money back.
Almost all banks are FDIC insured. You can look for the FDIC logo at the bank counters or at the entrance of your bank branch.
Credit unions are insured with the National Credit Union Administration.
If you have more than $250,000 in individual bank accounts, which most people don’t, the amount over $250,000 is not insured, and experts recommend transferring the rest of your money to another financial institution said Caleb Silver, editor-in-chief. by Investopedia, a financial media website.
If you have several individual accounts with the same bank, such as a savings account and a certificate of deposit, they will be added together and the total is insured up to $250,000.
Federal officials have taken steps to ensure that other banks are not affected.
“You don’t have to worry too much about your money if it’s in one of the bigger banks, and even some regional banks and credit unions,” Silver said.
Can I see if my bank is going bankrupt?
If you’re worried about your bank closing soon, there are a few things to keep an eye out for, Silver said:
- 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 when there is news about it.
You need to make sure you pay close attention to how your bank behaves, Silver said.
“If they try to raise money through a stock offering or if they try to sell more shares, they could run into problems with their balance sheets,” he 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 like your spouse, said Greg McBride, chief financial analyst at Bankrate, a financial services company.
“A married couple can easily secure a million dollars in the same bank by each having an individual account and a joint account,” McBride said.
If a couple each has an individual account and a joint account where they have equal withdrawal rights, they can each have up to $250,000 insured in their individual accounts and up to $250,000 in their joint accounts. This means that each of them is insured up to $500,000.
- Switch to another financial institution.
By moving your money to other financial institutions and having up to $250,000 in each account, your money is insured by the FDIC, McBride said.
- No cash withdrawal.
Despite the recent uncertainty, experts advise against withdrawing money from your account. It is safer to keep your money with financial institutions than at home, especially if the amount is insured.
“Now is not the time to take your money out of the bank,” Silver said.
Even people with uninsured deposits usually get almost all of their money back.
“It takes time, but in general, all savers — both insured and uninsured — get their money back,” said Todd Phillips, a counsel and former attorney with the FDIC. “Uninsured depositors may have to wait for some time and can get a haircut where they lose 10% to 15% of their savings, but it’s never zero.”
In the past, the FDIC says it has repaid insured deposits within days of a bank closing. The FDIC will transfer this amount to a new account at another insured bank or issue a check.
What about other investments?
The FDIC offers an Electronic Deposit Insurance Estimator, a tool for knowing how much of your money is insured by a financial institution.
FDIC deposit insurance covers:
- Checking accounts, negotiable withdrawal accounts (NOU), savings accounts, money market deposit accounts (MMDAs), certificates of deposit (CDs), bank drafts, money orders and other official items issued by an insured bank.
FDIC deposit insurance does not cover the following:
- Equity investments, bond investments, mutual funds, life insurance, annuities, municipal securities, crypto assets, vaults or their contents, U.S. Treasury bills, bonds or debentures.
Source: LA Times