Bank Failures: 5 Tips To Secure Your Money

With so many bank failures in the news, it's difficult to know what to do to safeguard your money. One thing you don't want to do is stuff it under your mattress. It won't appreciate, it could get stolen or lost, and it doesn't make financial sense.

1. Make sure your bank is insured by the FDIC - When your money is in a bank insured by the FDIC, the government guarantees your funds up to $100,000. If your bank fails (becomes insolvent), the FDIC will mail out checks to the bank's depositors within 48 hours. For amounts over the $100,000 limit, you won't get additional monies back until the bank's assets are sold.
2. Split your financial assets among several healthy banks - This is especially attractive for depositors who have in excess of $100,000. Make sure to choose an FDIC-insured bank.
3. Steer clear of unrealistically high returns on investment - If the institution offers what appears to be an unusually high rate of return, it may be a sign the bank is in trouble, grasping for customers to deposit their funds. If you do opt to invest, make sure the bank is FDIC-insured and that you are comfortable taking such a risk. Bank failures do occur with more frequency in today's uncertain economic climate. Consider the option of lower yield but safer U.S. Treasury Securities, which carry full government backing (and they have never had a default).
4. Know which accounts are covered by the FDIC. - The FDIC only insures checking and savings accounts deposits, money market deposits and time-deposit financial vehicles such as certificates of deposit (CDs). Money invested in mutual funds, life insurance policies, stocks, bonds or other securities - even if obtained them through an FDIC-insured financial institution, are not covered by FDIC protection. If your bank fails, you're out that money, period.
5. FDIC insurance increases to $250,000 for certain retirement accounts - The FDIC offers protection up to $250,000 for retirement accounts in the following categories: traditional, Roth, simple and SEP IRAs, and self-directed 401k and self-directed Keogh plans.