No. As long as your bank offers FDIC insurance -- or your credit union offers NCUA insurance -- you shouldn't spend any time stressing about a potential failure.
Inflation Is Eating Away at Your Funds
According to the Bureau of Labor Statistics, the average rate of inflation from April 2023 to April 2024 was 3.4%. If you've been keeping your money in a savings account with a lower yield than the rate of inflation, you should switch over to a higher-yield account.
You can keep money in a bank account during a recession and it will be safe through FDIC and NCUA deposit insurance. Up to $250,000 is secure in individual bank accounts and $500,000 is safe in joint bank accounts.
The first line of defense, federal deposit insurance from the FDIC, has worked reliably to date. To avoid a financial hit if your bank fails, stick to insured institutions and account types, stay under account balance limits and use different ownership arrangements.
U.S. government securities—such as Treasury notes, bills, and bonds—have historically been considered extremely safe because the U.S. government guarantees timely payment of interest and principal, backed by its full faith and credit.
When is DICGC liable to pay? If a bank goes into liquidation, DICGC is liable to pay to the liquidator the claim amount of each depositor upto Rupees five lakhs within two months from the date of receipt of claim list from the liquidator.
As long as your deposit accounts are at banks or credit unions that are federally insured and your balances are within the insurance limits, your money is safe. Banks are a reliable place to keep your money protected from theft, loss and natural disasters. Cash is usually safer in a bank than it is outside of a bank.
Credit unions and banks are both insured, with most banks being insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000 per customer. Most credit unions are similarly insured by the National Credit Union Administration (NCUA) for up to $250,000.
Banks face fines if they fail to provide free access to cash withdrawals for consumers and businesses, the Treasury has confirmed.
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.
“While it can be tempting to withdraw all your funds from a bank and keep them at home, banks are typically more secure and offer protection against theft or loss. Plus, keeping money in a bank allows for easier access to funds if needed for emergency expenses or unexpected bills.”
“The mortgage will be transferred to another bank if the first bank experiences problems and fails, and you will need to start making payments to the new lender. You might need to refinance your mortgage with the new bank, depending on the details of the transfer.”
FDIC Insurance
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.
Insured depositors are paid first, then uninsured depositors, then general creditors, and, finally, shareholders.
Beyond the insurance issue, credit unions are considered safer than banks because they tend to take fewer risks and adhere to conservative investment principles. In part, that's because credit unions are nonprofits whose owners are their members, whereas banks are for-profit entities whose owners are investors.
For the most part, if you keep your money at an institution that's FDIC-insured, your money is safe — at least up to $250,000 in accounts at the failing institution. You're guaranteed that $250,000, and if the bank is acquired, even amounts over the limit may be smoothly transferred to the new bank.
Unless your bank has set a withdrawal limit of its own, you are free to take as much out of your bank account as you would like. It is, after all, your money. Here's the catch: If you withdraw $10,000 or more, it will trigger federal reporting requirements.
The government generally can't take money out of your bank account unless you have an unpaid tax bill (and before they go to that extreme, they will send you several notifications and offer you multiple opportunities to pay your outstanding taxes).
Often, banks will let you withdraw up to $20,000 per day in person (where they can confirm your identity). Daily withdrawal limits at ATMs tend to be much lower, generally ranging from $300 to $1,000.
In addition, you can also move money to another financial institution protected by the FDIC. Since it is not the individual that is insured but the account, spreading your money across financial institutions can protect $250,000 per account.
Unfortunately, these problems have carried into 2024 making many uneasy about the overall security of financial institutions across the country. The Federal Deposit Insurance Corporation (FDIC) has continued to see more banks fail, as outlined by the FDIC failed bank list, with the economy still struggling as a result.
A changing landscape
Uninsured depositors have lost their money in just 6% of all bank failures since 2008. But before that, it was the norm for uninsured depositors to lose it all when a bank went bust.