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

New York (AP) — The recent failures of Silicon Valley Bank and Signature Bankwhich has been mostly catering to the technology industryYou may be worried about your money. They were the second and third largest bank failures in US history.

It all started last week when a lot of depositors tried to withdraw their money from a Silicon Valley bank In Santa Clara, California. This is known as a bank run.

The bank was forced to sell treasury bonds and other securities at a huge loss and more people kept trying to withdraw money as news of the situation spread, causing the bank to fail.. Regulators have taken control of New York-based Signature Bank Soon after, he said it was necessary to protect depositors after so many people withdrew money.

In response, regulators guaranteed all deposits In the two banks and put in place a program to help protect other banks to protect them from a run for deposits.

Here’s what you need to know:

Is my money safe?

Yes, if your money is in an insured bank Federal Deposit Insurance Corporation. And you have less than $250,000 in there. If the bank fails, you get your money back.

Almost all banks are FDIC insured. You can look for the FDIC logo on bank teller windows or at the entrance to your bank branch.

Credit unions are insured by National Credit Union Administration.

If you have more than $250,000 in an individual account, which most people don’t, more than $250,000 is considered uninsured and experts recommend transferring the remainder of your money to a different financial institution, said Caleb Silver, editor-in-chief of Investopedia, a financial media website. Joint accounts are insured up to $500,000.

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

“You shouldn’t worry too much about your money if it’s in a major bank, and even some regional banks and credit unions,” Silver said.

Can I tell if my bank will fail?

If you’re concerned about your bank closing in the near future, there are a few things you can watch out for, according to Silver:

– Watch your bank’s share price.

Follow the quarterly and annual reports from your bank.

– Start a Google Alert for your bank if there is news about it.

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

“If they’re trying to raise money by offering shares or if they’re trying to sell more shares, they may have a problem on their balance sheet,” Silver said.

Should I look for alternatives?

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

Opening a joint account

Greg McBride, chief financial analyst, said: Banka financial services company.

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

Transfer to another financial institution

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

– Don’t withdraw cash

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

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

Even people with uninsured deposits usually get almost all of their money back.

“It takes time, but overall, all depositors — insured and uninsured — get their money back,” said Todd Phillips, a former FDIC counsel and attorney. “Uninsured depositors may have to wait a while, they may have to depreciate their savings as they lose 10 to 15% of their savings, but it never goes to zero.”

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Associated Press writer Ken Sweet contributed to this report.

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The Associated Press receives support from the Charles Schwab Foundation for Educational and Interpretive Reporting to improve financial literacy. The independent foundation is separate from Charles Schwab & Partners. The Associated Press is solely responsible for its journalism.