With two historic bank failures in March – and amid continuing news about other struggling banks – consumers are rightly concerned about just how safe it is to keep their money in a bank. Here’s how to protect your cash.
What’s happening with banks?
In the wake of the second- and third-largest bank collapses in US history occurring in March, lots of people are worried. After Silicon Valley Bank collapsed, followed by Signature Bank, analysts are concerned that more may follow.
A new study found that at least 186, and perhaps 190, additional banks are at risk of failure if only half of their depositors suddenly decided to withdraw their funds, Yahoo! Finance reported.
A lesson from ” It’s a Wonderful Life”
Anyone who’s ever seen the Christmas fantasy film It’s a Wonderful Life remembers the townspeople suddenly making a run on the Bailey Brothers Building and Loan to pull out their money due to fear. George and Mary use their savings to keep the bank solvent.
This film is a real-life lesson. Some of the runs made on Silicon Valley Bank and Signature Bank, out of fears that the banks were failing, helped lead to their collapse, USA Today reported. Such fear and massive withdrawals could cause other financial institutions to fail.
Good news for consumers with $250,000 or less deposited
Anyone with $250,000 deposited or less has protection from the Federal Deposit Insurance Corporation (FDIC), guaranteeing that anything up to that amount is covered. In actuality, very few people have more money than that deposited in banks. So for most consumers, there is little to worry about if your money is in an FDIC-insured institution and account.
How to protect your money
If you have $250,000 or less, make sure that your money is deposited at an FDIC-insured bank. Also, ensure you are following the FDIC’s coverage rules, Yahoo! News reports.
What if you have more than $250,000?
If you have over $250,000 in cash, there are two strategies to use.
1. Use multiple accounts: Distribute your money through multiple accounts at different banks that are FDIC-insured, keeping each account at the $250,000 or less limit to ensure you will have FDIC protection. For example, if you have $1 million, put $250,000 into four separate FDIC-protected banks.
2. Deposit your money in larger, more secure banks: Lean toward keeping your money in larger, national banks, as these tend to be safer than regional or community banks or local credit unions. Think “Too Big to Fail.” While the larger banks are no guarantee, they are typically on much firmer financial footing than smaller banks, making the possibility of collapse much less likely.
What are the strongest banks in the US right now?
According to Bankrate, here are the current top 15 largest banks by total assets, in order, as of March 14, 2023: J.P. Morgan Chase, Bank of America, Citigroup, Wells Fargo, U.S. Bancorp, PNC Financial Services, Truist Bank, Goldman Sachs, Capital One, TD Group, Bank of New York Mellon, State Street, Citizens Financial, First Republic Bank, Morgan Stanley Private Bank.
