NEW YORK (AP) – The recent failures of Silicon Valley Bank and Signature Bank, which were mostly geared toward the tech industry, may have you worried about your money. They were the second and third largest bank failures in US history.
It all started last week when too many depositors tried to withdraw their money from Silicon Valley Bank in Santa Clara, California. That’s called a bank run.
The bank was forced to sell government bonds and other securities at heavy losses, and as news of the situation spread, more and more people tried to withdraw funds, leading to the collapse of the bank. Regulators took control of New York-based Signature Bank soon after, saying it was necessary to protect depositors after too many people began withdrawing money.
In response, regulators guaranteed all deposits at the two banks and created a program to protect other banks from a deposit rush.
Here’s what you need to know:
IS MY MONEY SAFE?
Yes, if your money is with a Federal Deposit Insurance Corp. insured bank and you have less than $250,000 there. If the bank goes bust, you get your money back.
Almost all banks are FDIC insured. You can look for the FDIC logo at bank teller offices or at the entrance to your bank branch.
Credit unions are insured with the National Credit Union Administration.
If you have over $250,000 in an individual account, which most people don’t have, the amount over $250,000 is considered uninsured, and experts recommend that you wire the rest of your money to another financial institution, Caleb Silver said , Editor-in-Chief of Investopedia, a financial media website. Joint accounts are insured up to $500,000.
Federal officials have taken steps to ensure other banks are not affected.
“You shouldn’t worry too much about your money if it’s in one of the bigger banks, and even some of the regional banks and credit unions,” Silver said.
CAN I DETECT IF MY BANK FAILS?
If you’re worried about your bank closing in the near future, according to Silver, there are a few things to watch out for:
— Watch your bank’s share price.
— Keep an eye on your bank’s quarterly and annual reports.
— Start a Google Alert for your bank if there is any news about it.
You should make sure you pay close attention to how your bank is behaving, Silver said.
“If they’re trying to raise money through a stock offering or if they’re trying to sell more shares, they could have problems with their balance sheet,” Silver said.
SHOULD I LOOK FOR ALTERNATIVES?
If you have more than $250,000 in your bank, there are a few things you can do:
— Open a joint account
You can protect up to $500,000 by opening a joint account with someone else like your spouse, said Greg McBride, chief financial analyst at Bankrate, a financial services company.
“A married couple can easily protect a million dollars at the same bank by having an individual account and a joint account together,” McBride said.
— Switch to another financial institution
Moving your money to other financial institutions and having up to $250,000 in each account ensures your money is insured by the FDIC, McBride said.
— Do not withdraw cash
Despite the recent uncertainty, experts advise against withdrawing cash from your account. It is safer to keep your money in financial institutions than at home, especially if the amount is insured.
“It’s not time to pull your money out of the bank,” Silver said.
Even people with uninsured deposits usually get almost all of their money back.
“It takes time, but generally all depositors — both insured and uninsured — get their money back,” said Todd Phillips, a counsel and former attorney with the FDIC. “Uninsured depositors may have to wait some time and may have to get a haircut where they lose 10-15% of their savings, but it’s never zero.”
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Associated Press writer Ken Sweet contributed to this report.
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