If you watch or read the news, you've most likely noticed the issues surrounding the federal takeover and failure of IndyMac Bank. After the announcement, images of people lining up to withdraw their money from the bank were seen all over the news. Combined with the state of the economy, many people are asking themselves this question, "Is my money safe?"
The answer for most of the population is yes. The FDIC insures deposits of up to $100,000, so unless you have more than that in the bank, your money is insured in the event that something was to go wrong.
What is the FDIC?
The FDIC, or Federal Deposit Insurance Corporation, is independent of the federal government and has been around since 1933. Their main objective is to insure deposits in banks and other institutions. It serves other purposes as well, such as monitoring potential risks to deposits and monies, then addressing those risks and working to limit their effects on the overall economy, particularly in the event that a bank fails.
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The FDIC has massive insurance funds to cover potential risks-nearly $53 billion. The loss from IndyMac is expected to be between $4 and 8 billion. In the unlikely event the FDIC were to run out of money, they would then go to other banks to raise more money. This would most likely cost more money for the average consumer who keeps their money in a bank, probably in the form of higher fees.
How do I know my money is safe?
As long as you are making deposits less than $100,000, your money is safe. Even many retirement accounts, like IRAs and 401k plans for your place of employment, are insured to up to $250,000 for each person.
If you are depositing over $100,000 to your bank at a time, those deposits are not in turn insured past the $100,000 mark. So in the event something happened and money was lost, if you deposited $175,000 in one of your accounts, you would only be insured for $100,000, meaning you will have lost $75,000 of that.
What about business or joint accounts?
If you have a business account or a joint account, your money is still insured. With joint accounts, both person's interest is covered up to $100,000. If the person has a single account at the same bank, that is also insured for up to $100,000.
With businesses, however, even with multiple persons on the account, the money is only insured up to $100,000. So, accounts for businesses are added together and insured for a total of $100,000.
Keeping your money safe
Even with the recent scares in the economy, the federal takeover, and banks in general, for the majority of the population, your money is safe. The FDIC will insure your money up to $100,000.
If you are worried about your money and want to take extra precautions, make sure you break up your accounts so that none of them are over $100,000. Have multiple accounts in different banks to ensure you will remain insured and to make sure all of your money is recovered in the event you will need to collect insurance on it.
Many people are concerned about the money that they have worked hard for and are unsure of whether or not it is safe to keep their money in the bank. However, as long as you make deposits of less than $100,000, your money is safe.
