New York (CNN) – Let’s face it: If you have a US bank account, hearing about bank collapses in recent months doesn’t sound good.
After all, the safest and most boring place to keep your money is supposed to be the bank, not the reason you should turn to Advil.
Well guess what? The safest place to keep your money is still a bank, and it will be even if some banks fail from time to time.
Here’s what you need to know to keep things in perspective, despite the recent closures of First Republic Bank, Silicon Valley Bank, and Signature Bank.
How do I know my money is safe?
If you have accounts at a financial institution insured by the FDIC, you can rest assured that your deposits of at least $250,000 will be covered. And in some circumstances could be more.
Here’s why: Each deposit account holder will be insured up to $250,000, so if you have a joint account with your spouse, for example, your money will be insured up to $500,000. Or if you have a personal checking account and a joint checking account at the same bank, your money will be locked in each of those accounts up to $250,000.
The story is similar in federally insured credit unions. If this is where you keep your money, your deposit will be insured for a minimum of $250,000 for National Credit Union Administration (NCUA)which, like the FDIC, is backed by the full faith and credit of the United States Government.
How do I know if my bank will fail?
I can not. If a bank is in trouble, those on the books are likely to see it come first.
“[Los clientes] “They’ll have to keep track of their bank’s financial statements, regulatory filings, audit data and other materials so they can identify red flags,” said Marbue Brown, a former chief customer experience executive at JP Morgan Chase who now works as an executive advisor at a Fortune 500 company.
Also, much of the information that would help you assess the health of your bank is not public, such as deposit inflows and outflows, credit losses, and funding sources. And to the extent that it’s reported, it’s trailing at the end of each quarter.
What do I do if my bank collapses?
Every bank collapse decision is a little different.
The FDIC will release the information within about a day of taking over a failing bank so that its customers will know what steps to take and when. The best place to look for this information is at List of failed banks for the agency.
But in general, when the FDIC takes over a bank, it does everything it can to ensure customers have immediate access to their money and to keep banking going uninterrupted, even if it’s a temporary “bridge” the bank the FDIC can create to handle customer accounts. As she seeks to find a permanent home for the assets and liabilities of the failed banks.
In the case of First Republic, all of its customers’ deposits were immediately bought out by JPMorgan Chase and there was no interruption in banking services.
So shouldn’t I care if a bank other than my own fails?
Mostly not. It will not affect your bank accounts.
However, the collapse of other banks provides a good reminder for all:
If you’re lucky enough to store more than $250,000 in a single bank, check how much of your money will be covered by FDIC insurance in case your bank fails. (use the FDIC Electronic Deposit Insurance Estimator).
If it turns out, for example, that your combined checking and savings account is worth more than $250,000, you must transfer any money over that limit and deposit it in another FDIC-insured bank. This way all your funds will be appropriately secured.
“[Es] It’s a wake-up call for people to always make sure their money is in an FDIC-insured bank, within FDIC limits, and following FDIC rules,” Bankrate analyst Matthew Goldberg said.
CNN’s Ramisha Marouf contributed to this report.
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