Is My Money Safe? | Take Care (2024)

The collapse of Silicon Valley Bank and Signature Bank might have you wondering if your bank is next. If so, what happens to your money?

To be clear, analysts don’t expect to see a ripple effect across the banking industry. The Federal Deposit Insurance Corporation already has stepped in and taken control of Silicon Valley Bank and Signature Bank. Because of the government’s intervention, customers of these banks had access to all of their money as of March 13, according to a joint statement by the Treasury, Federal Reserve and FDIC.

However, if you’re concerned whether your money is safe, here’s what you need to know about the protections that are in place at banks and credit unions.

What happens if a bank fails?

The answer depends on whether it was a federally insured bank.

The FDIC is an independent government agency that insures deposits in banks. There are more than 4,700 FDIC-insured financial institutions in the U.S. If you have an account at an FDIC-insured bank, your account is covered by deposit insurance.

The FDIC pays deposit insurance within a few days of a bank’s closing by transferring customers’ accounts to another insured bank or sending a check for the amount of the insured balance. Be aware that there is a limit on the dollar amount that deposit insurance covers (more on that below). Deposits that exceed that limit can be harder to recover if a bank fails.

You can use the FDIC BankFind tool to find out if your bank is insured.

What happens if a credit union fails?

The National Credit Union Share Insurance Fund provides deposit insurance for members of federally insured credit unions, which account for 98% of credit unions. If an insured credit union fails, the National Credit Union Association will transfer members’ accounts to another credit union or issue checks for insured deposit amounts.

You can find out if your credit union is insured by searching at Find a Credit Union.

What is deposit insurance?

Both the FDIC and NCUSIF insure deposits up to $250,000 per depositor, per institution, per ownership category. You don’t have to apply for deposit insurance. Coverage is automatic when you open an account.

However, not all types of deposits are covered by FDIC and NCUSIF insurance. So it’s important to know what is and is not protected.

Types of deposits that are protected:

  • Checking accounts
  • Savings accounts
  • Money market accounts
  • Time deposits such as certificates of deposit

Types of deposits that are NOT protected:

  • Stocks
  • Bonds
  • Mutual funds
  • Municipal securities
  • Annuities
  • Life insurance policies

Can you have more than $250,000 and be covered?

It is possible to be fully covered with more than $250,000 at one insured bank or credit union if you have accounts in different ownership categories. The most common ownership categories are single owner accounts, joint accounts, certain retirement accounts and revocable trust accounts.

If, say, you had $250,000 in an individual account and $250,000 in a joint account, the full $500,000 would be covered. However, if you had $50,000 in an individual checking account and $250,000 in an individual savings account, you would exceed the coverage limit by $50,000 because both accounts fall under the same single owner category.

Alternatively, if you have more than $250,000, you can be fully covered by dividing your money among accounts at multiple banks or credit unions. To be clear, deposits must be spread over accounts at different institutions, not just different branches of the same institution.

What happens to uninsured deposits?

If you have deposits that exceed $250,000, there is no guarantee that you will get uninsured deposits back if your bank or credit union fails. The financial institution’s assets will be sold, and its debts, including claims for deposits over the insured limit, will be settled. It is possible that you might get a portion or all of your uninsured deposits. However, payments are typically paid periodically over the course of several years as the financial institution’s assets are sold.

The FDIC and NCUSIF will not cover any deposits in banks or credit unions that aren’t federally insured. That’s why it’s important when opening an account to make sure that the bank or credit union is insured by the FDIC or NCUSIF.

What happens to the contents of safe deposit boxes?

The FDIC does not insure the contents of safe deposit boxes at banks. If your bank fails, you likely will be able to retrieve the contents of your safe deposit box. If another bank acquires your bank’s branches, you can contact that bank to ask about accessing your safe deposit box. If the failed bank isn’t bought by another bank, the FDIC will contact you about your safe deposit box.

What happens to direct deposits if a bank fails?

If your bank fails and another bank acquires it, any direct deposits you receive will go into a new account that is opened for you at the acquiring bank, according to the FDIC. If your failed bank is not acquired by another bank, the FDIC typically will try to find another bank to accept your direct deposits, at least temporarily.

What happens to automatic payments and uncleared checks if a bank fails?

If your bank fails and another bank acquires it, there usually isn’t an interruption in services. So, checks and automatic payments should clear.

If the failed bank isn’t acquired and the FDIC has to freeze deposit accounts, outstanding checks or automatic payments made after the bank failure will be returned unpaid, according to the FDIC. You will then have to make sure other funds are available to make payments.

Bottom line

Your money is safe up to certain limits as long as your deposits are in a federally insured bank or credit union. If you have more than the $250,000 deposit insurance limit, you can take steps to cover all of your deposits by spreading them over different account owernship categories or at different banks.

[ Keep Reading: Beware of Scams Targeting Your Bank Account ]

Is My Money Safe? | Take Care (1)

Cameron Huddleston

Cameron Huddleston is the director of education and content at Carefull and the author of Mom and Dad, We Need to Talk: How to Have Essential Conversations With Your Parents About Their Finances. You can learn more about her at or follow her on Instagram at @cameronkhuddleston.

Is My Money Safe? | Take Care (2024)


Is My Money Safe? | Take Care? ›

Your money is safe up to certain limits as long as your deposits are in a federally insured bank or credit union. If you have more than the $250,000 deposit insurance limit, you can take steps to cover all of your deposits by spreading them over different account owernship categories or at different banks.

Can the government take money from your bank account during a recession? ›

It indicates an expandable section or menu, or sometimes previous / next navigation options. Your money is safe in a bank, even during an economic decline like a recession. Up to $250,000 per depositor, per account ownership category, is protected by the FDIC or NCUA at a federally insured financial institution.

Can the government take money from your bank account in a crisis? ›

The government can seize money from your checking account only in specific circ*mstances and with due process. The most common reason for the government to seize funds from your account is to collect unpaid taxes, such as federal taxes, state taxes, or child support payments.

Is my money 100% safe in a bank? ›

FDIC Insurance

Most deposits in banks are insured dollar-for-dollar by the Federal Deposit Insurance Corp. This insurance covers your principal and any interest you're owed through the date of your bank's default up to $250,000 in combined total balances. You don't have to apply for FDIC insurance.

How do I know my money is safe? ›

To look up your account's FDIC protection, visit the Electronic Deposit Insurance Estimator or call the FDIC Call Center at (877) 275-3342 (877-ASK-FDIC). For the hearing impaired, call (800) 877-8339. Accounts at credit unions are insured in a similar way, by the National Credit Union Association (NCUA).

What happens to my money in the bank if the economy collapses? ›

Deposit accounts offered by banks that are members of the FDIC receive FDIC insurance coverage. The standard FDIC deposit insurance coverage limit is $250,000 per depositor, per FDIC bank, per ownership category.

What is the safest place for money if the government defaults? ›

U.S. government securities–such as Treasury notes, bills, and bonds–have historically been considered extremely safe because the U.S. government has never defaulted on its debt. Like CDs, Treasury securities typically pay interest at higher rates than savings accounts do, although it depends on the security's duration.

Is Capital One safe from collapse? ›

Your money is safe at Capital One

The FDIC insures balances up to $250,000 held in various types of consumer and business deposit accounts.

How do I stop the government from taking my money? ›

The two most common ways to protect assets are:
  1. Choosing a protective business structure: It is not easy for the IRS to obtain property from an LLC or other corporation. ...
  2. Establishing legal trusts: Though usually related to estate planning, trusts legally shift ownership of assets whenever you decide.

Should I pull my money out of the bank? ›

A bank account is typically the safest place for your cash, since banks can be insured by the Federal Deposit Insurance Corp. up to $250,000 per depositor, per insured institution, per ownership category.

Where do millionaires keep their money if banks only insure 250k? ›

Wealthy people do not leave large amounts of money in saving/checking accounts earning no interest or income. Instead they invest their money in stocks, bonds, real estate, mutual funds, etc.

Is Wells Fargo bank safe from collapse? ›

Wells Fargo, along with thousands of other financial institutions, is FDIC-insured. FDIC insurance limits cap at $250,000.

Is 100k a lot to have in the bank? ›

Having over $100k in savings is generally considered a good financial position in the United States. A survey found that 51% of Americans believe $100,000 is the amount needed to be financially healthy1.

Are people pulling money out of banks? ›

A recent CNBC Select and Dynata Banking Behaviors Survey found that 40% of respondents who reported having withdrawn cash from their savings say they did so to cover fixed bills, such as a car payment. The second most cited reason, at 38%, was to cover variable expenses like groceries.

Is my money safe if my bank collapses? ›

As long as you do business with an FDIC-insured institution and keep less than $250,000 per account ownership category, your funds will be safe if your bank fails. However, you might face some minor inconveniences, such as waiting for a new debit card or updating your automatic payments.

Where do billionaires keep their money? ›

Common types of securities include bonds, stocks and funds (mutual and exchange-traded). Funds and stocks are the bread-and-butter of investment portfolios. Billionaires use these investments to ensure their money grows steadily.

Can the government just take money out of your bank account? ›

When Does the IRS Seize Bank Accounts? So, in short, yes, the IRS can legally take money from your bank account. Now, when does the IRS take money from your bank account? Before the IRS seizes a bank account, they make several attempts to collect debts owed by the taxpayer.

Where is the safest place to keep money during a recession? ›

Cash equivalents include short-term, highly liquid assets with minimal risk, such as Treasury bills, money market funds and certificates of deposit. Money market funds and high-yield savings are also places to salt away cash in a downturn.

Should I take my money out of the bank in 2024? ›

First and foremost, it is essential to choose a bank that is insured by the Federal Deposit Insurance Corporation (FDIC). The FDIC insures deposits up to $250,000 per depositor, per insured bank. This means that if your bank fails, you can still get your money back up to the insured amount.

Do I need to pull my money out of the bank? ›

In short, if you have less than $250,000 in your account at an FDIC-insured US bank, then you almost certainly have nothing to worry about. Each deposit account owner will be insured up to $250,000 — so, for example, if you have a joint account with your spouse, your money will be insured up to $500,000.

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