This Key Bank Feature Cannot Be Overlooked

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Want to make sure your money in the bank is safe? Read on to see what essential feature your bank needs to have. 

In early March, Silicon Valley Bank collapsed, and that situation sent shock waves across the banking industry and broad economy. After all, it was the biggest bank failure since the Great Recession. In its wake, a lot of people are now worried about the cash in their savings accounts.

If you have money in the bank, whether in a savings account, checking account, or CD, you may be concerned about your bank failing and losing all of your cash. But if your bank has this key feature, that’s not something you have to lose sleep over.

Is your bank FDIC-insured?

The purpose of FDIC insurance is to protect consumers in the event of a bank collapse. With FDIC insurance, your deposits of up to $250,000 per bank are fully covered. So if you have $30,000 in savings at a bank that fails, you won’t be out a dime.

You can also double your FDIC insurance limit by opening a joint account with another depositor. In that situation, you’ll have protection against losses for up to $500,000 in deposits. (Just make sure that your joint account holder is someone you trust fully, like a spouse, parent, or child, since they may be getting access to all of your savings.)

That $250,000 per person limit also renews, so to speak, when you open an account at another bank. So if you have $250,000 in one FDIC-insured bank and need to move another $50,000 into savings, all you have to do is open an account at another FDIC-insured bank. You’ll then have another $250,000 worth of protection there.

Now the good news is that most major banks are FDIC-insured. But if you want to see if yours is, you can use this FDIC tool to check on its status. If your bank is not FDIC-insured, you’ll definitely want to move your money into a bank that is.

You deserve peace of mind

The whole point of saving money and keeping it in the bank, as opposed to in a box under your mattress, is to protect your cash reserves and give yourself peace of mind. And if you keep your money at an FDIC-insured bank, you really shouldn’t have anything to worry about provided you’re sticking to that $250,000 limit per institution.

Of course, if you have cash beyond that point, you may need to spread it out. You may also want to think about investing some of that money in a brokerage account or retirement plan, where you could generate a much higher return than what a savings account, or even a certificate of deposit (CD), will pay you.

But if you have money earmarked for emergency expenses, that cash should stay at an FDIC-insured bank so you don’t lose out on principal. Since the FDIC was established in 1933, no depositor has lost any amount of money in an FDIC-insured account. And that statistic alone should make you feel better about keeping your money in a covered bank.

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