Is Your Money Safe in the Bank? What You Need to Know in 2024
Your money is protected in banks through federal insurance, making them one of the safest places to store your funds. Here's what you need to know about bank safety and deposit protection.
Bank Insurance Protection
The Federal Deposit Insurance Corp. (FDIC) insures bank deposits up to $250,000 per depositor, per institution, per ownership category. This protection applies to traditional banks displaying "Member FDIC" on their websites.
For neobanks and fintech companies, verify if they partner with FDIC-insured banks. Credit unions offer similar protection through the National Credit Union Administration (NCUA), also covering up to $250,000.
To protect amounts over $250,000, consider:
- Opening accounts at multiple banks
- Using different ownership categories (single and joint accounts)
Bank Safety in Current Times
Despite recent economic challenges, including bank failures and interest rate changes, your money remains safe in federally insured institutions. Banks offer better protection against theft, loss, and natural disasters compared to keeping cash at home.
Understanding Bank Failures
A bank fails when it can't meet depositor obligations, often triggered by bank runs - when many customers withdraw funds simultaneously. While bank failures made headlines in 2023 with Silicon Valley Bank and others, they're rare events. Since 2000, only 566 banks have failed out of thousands of institutions.
When a bank fails:
- Regulatory agencies close the bank
- They attempt to sell it to a healthy bank
- If unsuccessful, the FDIC pays customers their insured deposits within days
Woman holding money while talking
Protecting Against Bank Fraud
While banks are safe, follow these security practices:
- Never share passwords or personal information with unsolicited contacts
- Avoid clicking links in suspicious emails or texts
- Don't rush financial transactions with unfamiliar sources
- Use multifactor authentication
- Set up account activity alerts
- Employ password managers
Banks remain the most secure option for storing money, offering both federal insurance protection and potential interest earnings on deposits.