Is your money safe in the bank after Silicon Valley Bank failure?

Mar 21, 2023

Simone Del Rosario Business Correspondent

By Simone Del Rosario (Business Correspondent), Brent Jabbour (Producer), Mohammed Ali (Motion Graphics Designer), Emma Stoltzfus (Editor)

When Silicon Valley Bank collapsed, more than 90% of its accounts were uninsured. Federal regulators took extraordinary measures to secure customers’ uninsured deposits at both SVB and Signature Bank, but Treasury Secretary Janet Yellen has warned not all banks will get the same treatment.

Yellen told senators that uninsured bank deposits would only be secured if the federal government believed letting a bank fail would create systemic risk and significant economic consequences. Given that, customers around the country have started pulling money from smaller banks and depositing them into larger banks, further exacerbating the pressure on regional and community banks.

LEARN MORE: Will federal regulators secure deposits at all failing banks like they did at SVB?

Many more are wondering if their money is safe in the bank. It was a breakout search on Google this past week.

This is one of the most important questions to answer, and the short answer is yes, up to $250,000. Now here’s the longer answer and how to maximize coverage beyond $250,000.

Most banks are FDIC-insured. As long as a customer banks with a FDIC-insured bank, the money is safe up to $250,000, per account owner, per account type, per institution.

That means if a couple is married and has a joint bank account in Bank A, they could have up to $500,000 insured between the two of them. One of them could also have a single owner account at the same institution and be covered for an additional $250,000 in that account. The FDIC explains on its website the different account types one can use to spread out coverage. Money market deposit accounts are also insured up to $250,000.

A single person who has more than $250,000 to bank can also divvy it up into different institutions and be covered. That person could put $250,000 in Bank A, $250,000 in Bank B, $250,000 in Bank C, and so on.

Credit unions also come with a similar $250,000 guarantee. Instead of the FDIC, the National Credit Union Administration is what secures credit union deposits up to $250,000. So from credit union to small community bank to so-called “too big to fail” institution, under that limit, money is safe in the bank.

LEARN MORE: How Silicon Valley Bank collapsed in less than 48 hours

Tags: Banking, Janet Yellen, Signature Bank, Silicon Valley Bank

SIMONE DEL ROSARIO: SO LET’S TALK ABOUT ONE OF THE MOST IMPORTANT QUESTIONS OUT THERE. IS YOUR MONEY SAFE IN THE BANK?

THE SHORT ANSWER IS YES, UP TO $250-THOUSAND DOLLARS – WITH AN ASTERISK.

MOST BANKS ARE FDIC-INSURED. AS LONG AS YOU BANK WITH AN FDIC-INSURED BANK, YOUR CASH IS SAFE UP TO $250 THOUSAND, PER ACCOUNT OWNER, PER ACCOUNT TYPE, PER INSTITUTION.

SO THAT MEANS IF YOU’RE MARRIED AND HAVE A JOINT ACCOUNT IN BANK A, YOU COULD HAVE UP TO 500-THOUSAND DOLLARS IN IT INSURED BETWEEN THE TWO OF YOU.

YOU COULD ALSO HAVE A SINGLE ACCOUNT ON TOP OF THAT – FOR AN ADDITIONAL 250 THOUSAND.

THE FDIC EXPLAINS ON ITS WEBSITE THE DIFFERENT ACCOUNT TYPES YOU COULD TECHNICALLY USE TO SPREAD OUT COVERAGE.

MONEY MARKET DEPOSIT ACCOUNTS ARE ALSO INSURED UP TO 250K.

LET’S SAY YOU’RE A SINGLE PERSON AND FORTUNATE ENOUGH TO HAVE MORE THAN 250K IN CASH, YOU CAN ALSO DIVVY IT UP INTO DIFFERENT INSTITUTIONS AND BE COVERED.

YOU COULD PUT 250 IN BANK A, 250 IN BANK B, 250 IN BANK C, AND SO ON.

WHAT ABOUT A CREDIT UNION? THE INSURANCE SOURCE IS DIFFERENT, BUT THE SECURITY IS THE SAME. INSTEAD OF THE FDIC, THE NATIONAL CREDIT UNION ADMINISTRATION IS WHAT SECURES CREDIT UNION DEPOSITS UP TO 250K.

SO FROM CREDIT UNION TO SMALL COMMUNITY BANK TO A SO-CALLED “TOO BIG TO FAIL” INSTITUTION, UNDER THESE LIMITS, YOUR MONEY WILL ALWAYS BE GUARANTEED.