Is My Money Safe in the Bank?

By admin


The recent economic downturns have many of us asking ourselves questions: how do we know our money is safe in the bank? In past times of economic troubles, such as the Great Depression, it wasn’t uncommon for banks to experience what’s known as a “bank run”: when a large number of customers withdraw their cash out of fear that their bank is going to run out of money. These runs actually often speed up the process of a bank failure by draining the bank of its cash reserves. 

Since the Great Depression, many protections have been put in place so that people are protected against bank failures. The Federal Deposit Insurance Corporation (FDIC) insures bank accounts for up to $250,000 in the event of a bank run or a bank failure. But does that mean that a bank is the safest place your money can be?

In fact, the answer is yes. Even during economic downturns, a bank account is typically the safest place for your funds. Despite all the recent economic unrest surrounding the COVID-19 pandemic, no banks have reported issues of bank runs to the FDIC. Even if your cash totals up to more than $250,000, you have the option to distribute it amongst multiple banks and accounts so as to receive full insurance. Plus, cash is much better protected against theft or damage when stored in a bank account instead of your home. 

How Do I Determine Which Banks Are the Safest?

Even though money is determinably safer in the bank than elsewhere, there are some banking conditions you can look for that make it even safer. After determining that your bank is FDIC-insured, consider referencing private companies that research and provide rankings on banks’ safety. For example, BauerFinancial rates bank safety on a 1-5 star scale. Veribanc provides the opportunity to research individual banks as well as a general list of safe banks.   

These are helpful services, but it’s important to remember that ratings will be constantly changing. Intend to be realistic about how often you’ll keep up with them and how you’ll let them impact your decisions. 

There are other ways to determine which banks are safest that require more knowledge of the financial system, but the above are the two simplest ways. 

What’s Safer: Banks or Credit Unions? 

Sometimes, rumors will circulate that credit unions aren’t as safe as banks in times of economic struggles. In fact, they are equally as safe, just insured differently. While banks insure depositors up to $250,000 through the FDIC, credit union funds are insured for the same amount by the National Credit Union Share Insurance fund. Therefore, the funds in either case are also backed by the U.S. government. 

Where Else Can I Keep My Money?

Despite the knowledge that banks are a safe place to keep your cash, you might still want to diversify where you park your capital. Below is a list of alternative places to banks where you can keep your money, some more recommended than others. For a full list of reasoning why you should consider each option, consult this article

  1. Place in federal bonds 
  2. Invest in property or real estate 
  3. Invest in businesses or farms
  4. Buy precious metals, especially gold
  5. Purchase luxury assets 
  6. Keep your cash hidden 
  7. Purchase cryptocurrency

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The Admin Team at focuses on providing the best information related to finance for individuals living on Main Street America.

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