Bank Failures: Is Your Money Safe?

With all the bank failures and government takeovers in the news, we’ve all got the jitters these days. Will our bank fail? Is our money safe? What about our investment accounts, and the IRAs we have at our bank or credit union?

The bad news is that not all investments are protected by federal insurance, and there are limits on what is protected. The good news is that quite a lot is covered, and there are strategies for gaining more protection.

In the event of a bank failure, the Federal Deposit Insurance Corp. (FDIC) insures deposits, including money market accounts, up to $100,000. The vast majority of U.S. banks and many foreign-owned banks, are FDIC-insured. To make sure your bank is an FDIC member, go to "Bank Find” on the FDIC Web site at www.fdic.gov/deposit  and type in your bank’s name and state.

Accounts in credit unions are insured by National Credit Union Administration, which operates in essentially the same way as the FDIC.

Cash and securities such as stocks and bonds held in a brokerage account are protected by the Securities Investor Protection Corp., or SIPC. That includes 401(k) plans and investment accounts at banks, as long as they are registered with the Securities and Exchange Commission.

Experts say there’s no need to pull your money out of the bank or credit union. But be careful about having all your eggs in one basket with a 401K, stocks or mutual funds.

If you have any questions about your money or this article, leave us a comment by clicking the comment link below. We’ll get back to you with answers, if needed.