Placing your money in a federally-insured and highly regulated bank ensures that your hard-earned funds are protected and available when you need them.
Alternatives to a bank account, like keeping your money at home, places you at risk of losing your cash to burglary, theft, fire, floods, or other potential disasters. Plus, if you hide it somewhere, there’s always a chance you may forget where you put it, and you’ll never earn a dime on it.
When you use a bank account:
- Your money can be insured against loss up to $250,000 and many banks offer products that can provide additional protection
- Your money can gain interest, depending on the type of account you set up
- Your money is protected from unauthorized electronic transactions carried out, for example, by someone who has stolen your identity
- You can use banking services to conveniently transfer money
- You can take advantage of electronic bill pay services to efficiently pay bills instead of mailing payments
- You may use alerts and other tools to help you track your money, keep an eye on your spending habits and improve your budget
What is FDIC insurance?
The Federal Deposit Insurance Corporation (FDIC) is a federal agency that protects bank depositors against insured deposit losses when FDIC-insured banks close.The FDIC insures up to $250,000 per depositor per FDIC-insured bank. In the nearly 90-year history of the FDIC, no depositor has ever lost a penny of an insured deposit due to a bank closure.
Do I need to apply for FDIC insurance when I open a bank account?
No. Bank customers do not need to do anything; it’s automatically applied to any FDIC-insured bank deposit account. View the FDIC's Deposit Insurance resource.
How can I check if my financial institution is FDIC-insured?
FDIC-insured banks will have the FDIC logo at teller stations or posted at bank entrances. Look for “Member FDIC.” You may also check using the FDIC’s BankFind online tool to search for your institution. Alternatively, you can also contact the FDIC directly at 1-877-275-3342 and submit a request.
Are all bank products covered by the FDIC?
No. Deposits held in checking accounts, savings accounts, money market accounts, and certificates of deposits (CDs) are covered. Annuities, bonds, crypto assets, life insurance, mutual funds, safe deposit box contents, and stocks are not covered. For more information, check out the FDIC’s resource on “Are My Accounts Insured By the FDIC?”
Are there ways to protect my funds beyond $250,000?
Many banks offer a range of products and account options that can provide additional protection for your funds. Ask your bank if any of those products might be right for you.
Does FDIC insurance apply to online banks?
Yes, it does so long as they are member FDIC banks. FDIC insurance is not limited to brick-and-mortar banks.
What happens when FDIC-insured banks close?
The FDIC works to ensure that your insured deposits - up to $250,000 - are covered and available for you. The FDIC may take any of the following approaches to address the situation:
- Pay depositors
- Manage the bank and set up a “bridge bank” to assume the deposits and obligations of closed banks.
- Sell it to another bank.
Regardless of the strategy the FDIC uses, you can rest assured that you will be able to access your insured deposits.
Where can I learn more?
FAQs
When you use a bank account: Your money can be insured against loss up to $250,000 and many banks offer products that can provide additional protection. Your money can gain interest, depending on the type of account you set up.
Why is it safer to keep your money in a 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. Banks that are insured by the FDIC often say “Member FDIC” on their websites.
How is your money safe in a bank? ›
The FDIC insures your bank account to protect your money in the unlikely event of a bank failure. Bank accounts are insured by the Federal Deposit Insurance Corporation (FDIC), which is part of the federal government.
Why is your money safer in a bank account than stored at home? ›
Money that isn't in a deposit account isn't protected by FDIC insurance, so if it's stolen or lost in a natural disaster, it can't be replaced. Plus, keeping your funds in a deposit account ensures that they are earning interest on your behalf.
Why keeping money in bank is better than cash? ›
A regular savings account is "liquid." That is, your money is safe and you can access it at any time without a penalty and with no risk of a loss of your principal. In return, you get a small amount of interest. Check rates online as they vary greatly among banks.
Is my money 100 safe in a bank? ›
As long as the financial institution is insured by the FDIC or NCUA, the money you put into a deposit account at a bank or credit union is insured for up to $250,000 per depositor, per bank. If the bank collapses or fails, you can still get your money back within a few days of the bank's closure.
Where do millionaires keep their money? ›
Cash equivalents are financial instruments that are almost as liquid as cash and are popular investments for millionaires. Examples of cash equivalents are money market mutual funds, certificates of deposit, commercial paper and Treasury bills. Some millionaires keep their cash in Treasury bills.
Can banks seize your money if the economy fails? ›
The short answer is no. Banks cannot take your money without your permission, at least not legally. The Federal Deposit Insurance Corporation (FDIC) insures deposits up to $250,000 per account holder, per bank. If the bank fails, you will return your money to the insured limit.
Where is the safest place to put your money? ›
The 3 Safest Places for Young Adults to Put Their Money
- An emergency fund in a high-yield savings account. When you start saving money, the first priority should be building an emergency fund. ...
- The stock market for retirement savings. ...
- CDs or Treasuries for short-term savings goals.
Summary: Safest Banks In The U.S. Of May 2024
| Bank | Forbes Advisor Rating | Products |
|---|
| Chase Bank | 5.0 | Checking, Savings, CDs |
| Bank of America | 4.2 | Checking, Savings, CDs |
| Wells Fargo Bank | 4.0 | Savings, checking, money market accounts, CDs |
| Citi® | 4.0 | Checking, savings, CDs |
1 more rowMay 20, 2024
Even in the unlikely event of a bank failure, your money (maximum limit of ₹5,00,000 including money in Fixed Deposits) is protected. This insurance acts as a safety net, ensuring that a significant portion of your savings is secure.
Why is it better to place your money in a bank instead of hiding your money under the mattress? ›
In fact, banks are safer than keeping a large amount of cash in your wallet or under your mattress. That's because banks have security systems and technologies to protect your money against theft and fraud. Protection from fire, flood or theft. Cash can be stolen, damaged or destroyed.
Should you keep cash at home? ›
It's a good idea to keep enough cash at home to cover two months' worth of basic necessities, some experts recommend. A locked, waterproof and fireproof safe can help protect your cash and other valuables from fire, flood or theft.
Is $1000 a month enough to live on after bills? ›
But it is possible to live well even on a small amount of money. Surviving on $1,000 a month requires careful budgeting, prioritizing essential expenses, and finding ways to save money. Cutting down on housing costs by sharing living spaces or finding affordable options is crucial.
Why is money safe in a bank? ›
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.
Is $20,000 a good amount of savings? ›
Having $20,000 in a savings account is a good starting point if you want to create a sizable emergency fund. When the occasional rainy day comes along, you'll be financially prepared for it. Of course, $20,000 may only go so far if you find yourself in an extreme situation.
What is the advantage of keeping money in a bank? ›
Bank accounts are safe
Your money will be protected from theft and fires. Plus, your money will be federally insured so if your bank or credit union closes, you will get your money back.
Do we keep money in a bank for safety? ›
Money in the bank might not feel safe as it used to. But there are moves you can make to increase the safety of your funds. First, only keep your money with institutions insured by the FDIC or NCUA.
Why is it safer for you to put your money in a bank rather than under your mattress? ›
The truth is, the safest place for your money is still in a federally insured bank. In fact, banks are safer than keeping a large amount of cash in your wallet or under your mattress. That's because banks have security systems and technologies to protect your money against theft and fraud.
