SVB Collapse: Is my money safe? What you need to know about bank failures

The collapses earlier this year of Silicon Valley Bank and Signature Bank, which catered mostly to the tech industry, were the second and third largest bank failures in US history.

Now there are concerns about a third bank, First Republic Bank. Shares tumbled earlier this week after the bank disclosed that depositors pulled out more than $100 billion in the wake of the collapse of the Silicon Valley bank.

A Friday report from the Federal Reserve found that a combination of extremely poor bank management, weak regulations and lax government supervision caused the Silicon Valley bank to fail.

After the failures of Silicon Valley Bank and Signature Bank, regulators stepped in to guarantee all deposits at both banks and created a program to help other banks protect deposits.

Here’s what you need to know:

Is my money safe?

Yes, if your money is in a US bank insured by the Federal Deposit Insurance Corp. and you have less than $250,000 there. If the bank fails, you will get your money back.

Almost all banks are FDIC insured. You can see the FDIC logo on a bank teller window or at the entrance to your bank branch.

Credit unions are insured by the National Credit Union Administration.

If you have more than $250,000 in personal accounts at one bank, which most people don’t, any amount over $250,000 is considered uninsured and experts recommend that you keep the rest of your money at a different financial institution. Move in, said Caleb Silver, editor in chief of Investopedia, a financial media website.

If you have several different accounts at the same bank, for example a savings account and a certificate of deposit, they are clubbed together and insured up to a total of $250,000. (Read more about how joint accounts are protected.)

Federal officials are taking steps to ensure that other banks are not affected.

“If your money is in a large bank, and even some regional banks and credit unions, you shouldn’t be too concerned about it,” Silver said.

Should I be watching for red flags at my bank?

If you’re worried about your bank closing in the near future, there are a few things to keep in mind, according to Silver:

– View share price.

– Track your bank’s quarterly and annual reports.

– Start Google Alerts when there is news about your bank.

You want to make sure you pay close attention to the way your bank is behaving, Silver said.

“If they’re trying to raise money through a share offering or if they’re trying to sell more stock, they could be in trouble on their balance sheet,” Silver said.

Public companies, including banks, sell shares or issue new ones for a variety of reasons, so context matters. First Republic did so this year when the dangers facing it were well known, and it triggered an exodus of investors and depositors.

Should I be looking for alternatives?

If you have more than $250,000 in the bank, there are a few things you can do:

Open joint account

You can protect up to $500,000 by opening a joint account with someone else, such as your spouse, said Greg McBride, chief financial analyst at Bankrate, a financial services company.

“A married couple can easily protect a million dollars by having an individual account and a joint account at the same bank,” McBride said.

– move to another financial institution

McBride said that moving your money to other financial institutions and having up to $250,000 in each account will ensure that your money is insured by the FDIC.

– Do not withdraw cash

Despite the recent uncertainty, experts do not recommend withdrawing cash from your account. It is safer to keep your money in financial institutions rather than in your home, especially when the amount is insured.

“This is not the time to take your money out of the bank,” Silver said.

Even those who do not have uninsured deposits usually get almost all their money back.

“It takes time, but generally all depositors — both insured and uninsured — get their money back,” said Todd Phillips, a consultant and former attorney for the FDIC. Where they lose 10 to 15% of their savings, but it’s never zero.”

How long does it take for the insured money to become available if the bank fails?

Historically, the FDIC says it has returned insured deposits within days of a bank closing. The FDIC will either transfer that amount to a new account at another insured bank or issue a check.

How much money can be insured in joint accounts?

If you have a joint account, the FDIC covers each person up to $250,000. You can have both joint and single accounts in the same bank and be insured for each.

So if a couple each has separate accounts and a joint account where they have equal withdrawal rights, they can each be insured for up to $250,000 in their single accounts and up to $250,000 in their joint accounts. This means that they will each be insured for up to $500,000.

What about other investments?

Customers should take a close look at the types of investments they have at their bank to find out how much of their assets are insured by the FDIC. The FDIC offers an Electronic Deposit Insurance Estimator, a tool to find out how much of your money is insured per financial institution.

FDIC Deposit Insurance Covers:

– Checking Accounts – Negotiable Order Withdrawals (NOW) Accounts – Savings Accounts – Money Market Deposit Accounts (MMDAs) – Certificates of Deposit (CDs) – Cashier’s Checks – Money Orders – Other Official Items Issued by an Insured Bank

FDIC deposit insurance does not cover:

– Stock investments – Bond investments – Mutual funds – Life insurance policies – Annuities – Municipal securities – Safe deposit boxes or their contents – US Treasury bills, bonds, or notes – Crypto assets

How does a credit union compare to a bank?

Both credit unions and banks allow customers to open savings and checking accounts, among other financial products.

The main difference is that credit unions are non-profit institutions, which translates into lower fees and lower balance requirements, whereas banks are for-profit. Sometimes it also means it’s easier for credit union customers to get loans approved, McBride said.

Generally, customers are allowed to join credit unions depending on where they live or work.

Credit unions serve a smaller number of customers, which also allows for a more personalized experience. The tradeoff is that banks tend to have larger employees, more physical branches, and newer technology.

When it comes to protecting customer money, both the bank and the credit union insure up to $250,000 per customer. While banks are insured by the FDIC, credit unions are insured by the NCUA.

“Whether at a bank or credit union, your money is safe. There’s no need to worry about security or access to your money,” McBride said.

The text of this story is published from a wire agency feed without any modification. Only the headline has been changed.