Why Your Money is Safer in a Bank (2024)

Placing your money in a federally-insured and highly regulated bank ensures that your hard-earned funds are protected and available when you need them.

Alternatives to a bank account, like keeping your money at home, places you at risk of losing your cash to burglary, theft, fire, floods, or other potential disasters. Plus, if you hide it somewhere, there’s always a chance you may forget where you put it, and you’ll never earn a dime on it.

When you use a bank account:

  • Your money can be insured against loss up to $250,000 and many banks offer products that can provide additional protection
  • Your money can gain interest, depending on the type of account you set up
  • Your money is protected from unauthorized electronic transactions carried out, for example, by someone who has stolen your identity
  • You can use banking services to conveniently transfer money
  • You can take advantage of electronic bill pay services to efficiently pay bills instead of mailing payments
  • You may use alerts and other tools to help you track your money, keep an eye on your spending habits and improve your budget

What is FDIC insurance?

The Federal Deposit Insurance Corporation (FDIC) is a federal agency that protects bank depositors against insured deposit losses when FDIC-insured banks close.The FDIC insures up to $250,000 per depositor per FDIC-insured bank. In the nearly 90-year history of the FDIC, no depositor has ever lost a penny of an insured deposit due to a bank closure.

Do I need to apply for FDIC insurance when I open a bank account?

No. Bank customers do not need to do anything; it’s automatically applied to any FDIC-insured bank deposit account. View the FDIC's Deposit Insurance resource.

How can I check if my financial institution is FDIC-insured?

FDIC-insured banks will have the FDIC logo at teller stations or posted at bank entrances. Look for “Member FDIC.” You may also check using the FDIC’s BankFind online tool to search for your institution. Alternatively, you can also contact the FDIC directly at 1-877-275-3342 and submit a request.

Are all bank products covered by the FDIC?

No. Deposits held in checking accounts, savings accounts, money market accounts, and certificates of deposits (CDs) are covered. Annuities, bonds, crypto assets, life insurance, mutual funds, safe deposit box contents, and stocks are not covered. For more information, check out the FDIC’s resource on “Are My Accounts Insured By the FDIC?”

Are there ways to protect my funds beyond $250,000?

Many banks offer a range of products and account options that can provide additional protection for your funds. Ask your bank if any of those products might be right for you.

Does FDIC insurance apply to online banks?

Yes, it does so long as they are member FDIC banks. FDIC insurance is not limited to brick-and-mortar banks.

What happens when FDIC-insured banks close?

The FDIC works to ensure that your insured deposits - up to $250,000 - are covered and available for you. The FDIC may take any of the following approaches to address the situation:

  1. Pay depositors
  2. Manage the bank and set up a “bridge bank” to assume the deposits and obligations of closed banks.
  3. Sell it to another bank.

Regardless of the strategy the FDIC uses, you can rest assured that you will be able to access your insured deposits.

Where can I learn more?

Why Your Money is Safer in a Bank (2024)

FAQs

Why Your Money is Safer in a Bank? ›

The FDIC insures up to $250,000 per depositor per FDIC-insured bank. In the nearly 90-year history of the FDIC, no depositor has ever lost a penny of an insured deposit due to a bank closure.

Why is it safer to keep your money in a bank? ›

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.

How is your money safe in a bank? ›

The FDIC insures your bank account to protect your money in the unlikely event of a bank failure. Bank accounts are insured by the Federal Deposit Insurance Corporation (FDIC), which is part of the federal government. The insurance covers accounts containing $250,000 or less under the same owner or owners.

Why is it important to save money in the bank? ›

Saving in a bank is a very important step in managing personal finances. By saving at a bank, you can prepare for various needs in the future, such as the need for marriage, education, buying/building/renovating a house, to emergency fund needs.

Where do you think it is safer to keep the money and why? ›

Savings accounts are a safe place to keep your money because all deposits made by consumers are guaranteed by the FDIC for bank accounts or the NCUA for credit union accounts. Certificates of deposit (CDs) issued by banks and credit unions also carry deposit insurance.

Why is it better to place your money in a bank instead of hiding your money under the mattress? ›

In fact, banks are safer than keeping a large amount of cash in your wallet or under your mattress. That's because banks have security systems and technologies to protect your money against theft and fraud. Protection from fire, flood or theft. Cash can be stolen, damaged or destroyed.

Is my money 100% safe in a bank? ›

The good news is nearly all banks have insurance through the Federal Deposit Insurance Corporation (FDIC). This protection covers $250,000 “per depositor, per insured bank, for each account ownership category.” This insurance covers a range of deposit accounts, including checking, savings and money market accounts.

Is my money safe if a bank fails? ›

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.

How do you know a bank is safe? ›

Banks that are insured by the FDIC usually make it known that they offer this benefit in promotional materials and by displaying the FDIC logo prominently, but to be safe, you can use the FDIC's BankFind tool to verify if a bank is insured — and for what amount.

What are 5 benefits of saving money? ›

5 Reasons to Save Money
  • Long-Term Security. Among the many advantages of saving is the long-term security it provides you. ...
  • Saving money is a step towards financial independence. ...
  • Saving money enables you to take calculated risks. ...
  • Savings Reduce Stress. ...
  • Compound interest can be benefited from savings.

What are the disadvantages of using a bank? ›

Cons
  • Lower savings rates. Banks generally are less competitive than credit unions in terms of interest rates for savings accounts. ...
  • Higher loan rates. Interest rates for loans from banks tend to be higher than interest rates charged by credit unions. ...
  • Customer satisfaction.
Jul 27, 2023

What are the disadvantages of keeping money in the bank? ›

Cons of Savings Accounts
  • Interest Rates Can Vary. Interest rates for both traditional and high-yield savings accounts can vary along with the federal funds rate, the benchmark interest rate set by the Federal Reserve. ...
  • May Have Minimum Balance Requirements. ...
  • May Charge Fees. ...
  • Interest Is Taxable.
Sep 11, 2023

What is the safest bank? ›

JPMorgan Chase, the financial institution that owns Chase Bank, topped our experts' list because it's designated as the world's most systemically important bank on the 2023 G-SIB list. This designation means it has the highest loss absorbency requirements of any bank, providing more protection against financial crisis.

Where do millionaires keep their money? ›

Cash equivalents are financial instruments that are almost as liquid as cash and are popular investments for millionaires. Examples of cash equivalents are money market mutual funds, certificates of deposit, commercial paper and Treasury bills. Some millionaires keep their cash in Treasury bills.

What do banks do with your money? ›

Although banks do many things, their primary role is to take in funds—called deposits—from those with money, pool them, and lend them to those who need funds. Banks are intermediaries between depositors (who lend money to the bank) and borrowers (to whom the bank lends money).

Is it better to keep money in the bank or at home? ›

It's a good idea to keep a small sum of cash at home in case of an emergency. However, the bulk of your savings is better off in a savings account because of the deposit protections and interest-earning opportunities that financial institutions offer.

Why should we keep money in a bank and not at home? ›

Saving money is important for the future — this is something we all learn as children. The safest way to do this is to put your savings in a bank account. After all, in your account, your money is free from most risks and can slowly accumulate over time.

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