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After the recent financial bailout Bear Stearns– which is an investment bank, not the retail banks that most consumers do business with– received from the Federal Reserve, the subprime mortgage debacle, and a slowing national economy, many people have been left to question the reliability of their own banks. So how do you know if you’re bank is safe?
The Federal Deposit Insurance Corporation
After the Glass-Steagall Act of 1933 the United States created the FDIC, or Federal Deposit Insurance Corporation. If your bank is a member of the FDIC, then your checking and savings deposits are insured up to $100,000. This also applies to accounts with different banks. Let’s say you have $200,00: If you keep half in one member bank and the other half in another member bank, then the FDIC insures the entirety of your $200,000. Trusts, joint, and other individual accounts are insured independently. Funds insured by the FDIC include: checking, savings, and money market accounts; interest and outstanding cashier’s checks; and certificates of deposit– along with other accounts similar to those listed.
Uninsured Ways of Losing Money to Your Bank
Although the government protects the money in your accounts, there are several means of losing money that aren’t covered by the FDIC or your bank. These include:
- Deposits exceeding $100,000 at a member bank (excluding retirement accounts)
- embezzlement
- losses resulting from robbery
- the contents of safety deposit boxes
- inaccuracies resulting from bank directors
- illicit access to your account(s), etc
Keeping Your Accounts Protected
Despite extensive government protection of the money kept in your bank accounts, there are still some ways in which your deposits aren’t entirely safe. However, the chances of one of these issues affecting you are slight. The best way of avoiding any issues with your bank is by being aware of how and how you aren’t protected. And now you have an idea of the safeguards already in place.
Additional Resources
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