Is My Money Safe in the Bank? Here's What's Covered and What To Know
Is the bank really the safest place for your money?
With so much uncertainty in the economy right now, it's totally reasonable to have questions about what it means for your money—especially with the recent bank failures. We're all working overtime to file our taxes and avoid app scams, but now, do we really have to worry if our money is safe in the bank too? How much money is insured? Is it time to plan for a recession? Here's what the experts say.
"The answer is not a simple yes or no but where you decide to put your money," Kendall Meade, Certified Financial Planner at SoFi, tells Parade.
Is my money safe in the bank?
As the 2023 Bank Failures in Brief by the Federal Deposit Insurance Corporation (FDIC) details, both Signature Bank and Silicone Valley Bank failed in March '23—just two days apart. Before then, the most recent bank closure was in 2020 when Almena State Bank failed.
The timing begs the question: Is my money safe in the bank?
"Your money is safe in a bank," Douglas Boneparth, CFP, a financial adviser and president of Bone Fide Wealth, LLC, tells Parade. "As we saw with the collapse of Silicon Valley Bank and Signature Bank, depositors with balances under the insured limits were able to access their funds almost immediately."
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Is my money safe in a U.S. bank insured by the FDIC?
"Currently, deposits are insured up to $250,000 per depositor through [the] FDIC," Boneparth explains. "So, if you have a joint checking account, for example, that’s a total of $500,000 in covered deposits."
According to Meade, using an FDIC-insured bank is the most crucial part of choosing where you put your money.
"FDIC insurance limit is $250,000 per depositor, per bank, for each account ownership category," Meade adds. "This means that if you have an individual account and a joint account, the individual account would be covered up to $250,000 and the joint account would be covered up to $500,000. However, it is important to note that if you had an individual checking account and an individual savings account the two combined are insured up to $250,000; it is not per account."
Is it safe to keep all of my money in one bank?
Generally speaking, it's okay to keep all of your money in one bank—so long as it is FDIC-insured and doesn't exceed $250K.
Splitting up your money across different banks, however, can be helpful if you have more than $250K in one account. Multiple savings accounts may also help you in your saving journey as different accounts and banks have different incentives, APY (annual percentage yield), etc.
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Where is the safest place to keep money?
Most experts agree that keeping your money in an FDIC-insured bank is the safest place to keep your money.
“In the case of an FDIC-insured bank failure, federal law requires the FDIC to make payments of insured deposits 'as soon as possible,'" Meade explains. "The FDIC's goal is to make deposit insurance payments within two business days of the failure of the insured institution, but the amount of time can differ depending on the circumstances. Long story short: you will get your money back and it is safest in an FDIC-insured bank."
However, some other cash equivalents are also covered—even if not by the FDIC.
"Other cash equivalents, like money market funds and Treasury bills, do not have FDIC insurance but are backed by the full faith and credit of the institutions issuing them," Boneparth says. "In the case of Treasuries, it’s the United States Government, so they are considered risk-free. Generally speaking, bank deposits, money market funds and Treasuries are very safe."
Boneparth adds, "It would take an extreme or catastrophic event to lose value. This is why the banking system comes down to one thing: trust."
What is not insured at the bank?
“In terms of what is not insured, investment products that are not deposits—such as mutual funds, annuities, life insurance policies, and stocks and bonds—are not covered by FDIC deposit insurance," Meade explains.
Is money safer in the bank or at home?
One of the main draws of keeping money in a bank is that it accrues interest depending on your APY. Cash kept at home does not accrue interest.
Are all banks FDIC-insured?
Not all banks are FDIC-insured. As of this writing, there are more than 4,000 FDIC-insured banks. If you want to check to see if your bank is FDIC-insured, you can use the FDIC's BankFind Suite to tailor the search. You can also ask a bank representative in person, look for the FDIC sign at your bank, or call the FDIC at 877-275-3342.
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How much deposit insurance exists for credit unions?
According to the National Credit Union Administration (NCUA), members of all FDIC-insured credit unions also have the same benefit: coverage of up to $250,000 for single ownership accounts—including regular shares, share drafts, money market accounts and share certificates.
Next up, the best money-saving tips for building wealth.
Sources
Kendall Meade, Certified Financial Planner at SoFi
Douglas Boneparth, CFP, a financial adviser and president of Bone Fide Wealth, LLC,
