Keeping your money safe is critical to your financial security. Recent bank failures have many consumers and investors wondering how they can protect their money if the financial institution they put their cash in abruptly shuts down.
As Financial Literacy Month begins, understanding how to safeguard your cash is a fundamental lesson that everyone needs to learn. Here's what you need to know:
First, make sure your money is in a bank that is FDIC-insured. The Federal Deposit Insurance Corporation (FDIC) insures money deposited in checking, savings, money market accounts, and certificates of deposits (CDs) at a bank.
The FDIC adds together all single accounts owned by the same person at the same bank and insures a total of up to $250,000 per depositor. If you and your spouse have a joint bank account, it would be insured for up to $500,000. If a bank fails, the FDIC will pay insurance to depositors up to the insurance limit.
What if you have more than $250,000 in your bank? Then, split up the money between several banks - or ask your bank if they are part of a network, like the IntraFi Network Deposit Program, and request that the bank divide your money among other banks to ensure you do not exceed the insurance limit at any one bank.
Keep in mind FDIC insurance covers cash. It protects your cash deposits in certain accounts, not items in your safe deposit box. It also does not cover investments, such as mutual funds, annuities, life insurance deposits, stocks, and bonds. That money should be with a brokerage firm.
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