What Happens if Your Bank Fails?

by High Yield Savings Accounts

bank-failures-by-stateAs of Early February, there have been 34 bank failures in the US in the last 13 months, including 9 already in 2009. That is a large enough number to cause concern for the banking industry. But does that mean you should be concerned?

Not if your bank is a bank that is covered by the FDIC or the NCUA. If your bank is covered, so are your deposits, up to the federal limits.

FDIC and NCUA insurance limits

Until last fall, those insurance limits were $100,000, but the federal FDIC and NCUA insurance limits were temporarily raised to $250,000 to entice more people to leave their money in bank deposits, which would allow banks to lend more money. This higher FDIC limit is set to expire December 31, 2009.

Should you worry about your bank failing?

Not really. As long as your bank is covered by the aforementioned federal programs, then you don’t have much to worry about unless your deposits are above the limits. If they are, try putting money in your spouse’s name, a high yield CD, or into another top high yield savings account. That way you maximize your protection under the FDIC and NCUA insurance limits.

Bank Safety is important

In a recent post we talked about bank safety when we asked the question – is online banking safe? The answer is probably yes, so long as you are taking the proper precautions – using updated software and operating system, anti-virus software, updated spyware program, etc. You can never be too careful when you are dealing with your online bank accounts!

Photo source: CNN Money.


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