Will Your Bank Fail?

With banks failing at record numbers, you want to make sure that you keep you money safe.  With over 100 banks failing this year alone, you want to make sure your money is safe in the bank.  After all you worked hard for it and you shouldn’t lose it because your bank fails.
 
The FDIC (Federal Deposit Insurance Corporation) insures bank accounts and the NCSIF (National Credit Union Share Insurance Fund) insures credit unions.   These two government agencies will reimburse you if you bank with one of their insured banks / credit unions up to their limits.
 
This is what you personally have to do.  First make sure you are banking with an FDIC or NCSIF institution.  You would check this out by going to www.FDIC.gov and then clicking on the Deposit Insurance tab and finally on Bank Find.  Here you can look up your bank to see if they are part of the program.  If not, move your accounts to a bank or credit union that is insured.
 
If you are at a bank that is insured, you need to make sure you accounts are covered with the limits.  If you have more than $250,000 in one bank (that includes all the different bank locations), then you need to check to see if you are covered or need to move part of you money into bank. Take these steps so that your money is secure and is there when you need it.

The FDIC: What You Need to Know

Did you see the gentleman on the news a few weeks ago who had $236,000 on deposit with Indy Mac Bank? He almost lost more than half of his money even though his bank was insured by the FDIC. That’s because the FDIC only insures deposit holder funds for up to $100,000. Lucky for him, the FDIC in Indy Mac’s case was paying an additional fifty cents on the dollar, so he got another $68,000 back. The bad news is that he lost $68,000. That’s a lot of money to lose.

If you want to protect your savings and deposits, the best way is to understand how the FDIC works and make it work to your advantage.

First make sure the bank you chose is FDIC insured. To verify, call 877-275-3342. If your bank isn’t FDIC insured, move your accounts to a bank that is FDIC insured.

The FDIC insures each account holder up to $100,000. Take a look at these examples to see how to protect your money:

Jane Smith
Checking Account $25,000.00
Savings Account $50,000.00
CD $50,000.00
Total Amount at Bank: $125,000.00

* Jane is only insured up to $100,000.00. She would lose $25,000.00 if her bank failed.

Greg and Sally Jones
Mutual Checking Account $15,000.00
Greg’s Savings Account $75,000.00
Sally’s Saving Account $30,000.00
Total Amount at Bank: $120.000.00

* Greg and Sally are insured up to $200,000.00. They are two different account holders. If they had a mutual savings account instead of two separate accounts, they would lose $20,000.00

Here are some other things that you need to be aware of:

• The FDIC insures $100,000 per account holder per bank, not per bank branch. Yes, some people have made that mistake. The branches aren’t separately owned. If you deposit money in the Springfield Bank – Centerville Branch and then open a new deposit account at the Springfield Bank – Mall Branch, that’s still the same bank, and the FDIC considers it to be all one pile of money. The same applies if you open one account at Springfield Bank – Online and one at a physical branch. If you have more than $100,000 to lose, use two or more separate banks.
• If you have a small business that uses your personal social security number as the tax identification number, Mary Brown, D/B/A Mary Brown Personal Chef, then that balance is part of your $100,000.
• If your bank is taken over by the FDIC, chances are that another bank will buy the accounts of the failed bank. When that happens, you have six months grace period under FDIC to reorganize your accounts if needed.

You work hard for your money, so keep it as safe as possible. Don’t lose money that you could have easily protected.

What is the FDIC?

What Happens Now?

With all the news about banks failing and concerns about the accuracy of the FDIC Watch List (and its secrecy), you may be wondering how to protect your money? Banks are supposed to be the safest place to store your money, right?

These questions are only new to today’s younger generation. Your grandparents and great-grandparents remember when bank failures were once all too common. Following the stock market crash of 1929, thousands of banks failed. In fact, bank failures of the past led thousands of people to begin storing their savings at home rather than entrusting it to their local bank. People would take their savings and bury it in the back yard, stuff it behind walls and inside of mattresses. Unfortunately, this led to a lot of lost, stolen, and literally destroyed cash. The Federal Deposit Insurance Company (FDIC) was started 1933 so people could safely keep their money in the bank knowing that at least a portion of their savings would be returned if their bank failed.

That’s right, the FDIC is an insurance company for banks! Just like you might be reimbursed a portion of your car’s value in the event of a crash, the FDIC will reimburse a portion of your cash if your bank fails. Next week, we’ll talk about how to find out if your bank is FDIC insured, how much money they will reimburse you, and how you can make the FDIC work to your advantage.