| After the recent unexpected shutdowns of Silicon Valley Bank and Signature Bank – which mark the second- and third-biggest bank failures in U.S. history, respectively – consumers are understandably concerned about the safety of their deposits and financial institutions.
It may help to know that not only are bank failures extremely rare, but there are also protections in place for consumers.
Chief among them is coverage through the Federal Deposit Insurance Corporation, or FDIC, which insures your money for up to $250,000 per depositor, per account ownership category, per bank. Since its creation in 1933, no depositor has lost FDIC-insured funds due to a bank failure. (If you belong to a credit union, there is similar coverage through the National Credit Union Administration.)
"You may have a short time without access, but the government has very speedy processes to get you back to using your cash in short order," said Carolyn McClanahan, a certified financial planner and founder of Life Planning Partners in Jacksonville, Florida. McClanahan is also a member of the CNBC Financial Advisor Council.
If you're over the FDIC limit, you might talk with your current bank about options, or consider splitting your balances across accounts at different banks.
Now is also a good time to check the financial stability of financial institutions you're doing business with. "Look up the bank's financial statements, ratings and reviews," said CFP Cathy Curtis, founder of Curtis Financial Planning in Oakland, California, and also a member of the council. You can also use search tools at the FDIC or NCUA to confirm deposit insurance coverage.
For more advice to help you make smart financial decisions, check out CNBC's Financial Advisor Hub and Personal Finance section. Also, join the PF team's weekly Twitter Space, "This Week, Your Wallet," this Thursday at 11 a.m. ET, for a look at what the Silicon Valley Bank collapse may mean for your money. |
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