ARE BANKS SAFE RIGHT NOW?

Just three short months ago, Americans were staring at the potential of what could have been?one of the largest bank failures?in US history.

Then two months later in May, the well-known San Francisco-based bank, First Republic, was seized by state regulators, marking the second-largest bank failure in US history.

Fast forward to today, and many Americans are still concerned about the economy and the safety of their money.

Perhaps, the most frequent question I am asked by clients right now

(and the inspiration behind this week's newsletter) is:

Is my money still safe in a bank?

Short answer: YES

Your money is safe in a bank that has FDIC insurance.

This means that if your bank is insured by the Federal Deposit Insurance Corporation (FDIC) and you have less than $250,000 deposited, you are safe.

Thus, if there were to be a bank failure, you would get all of your money back.

This also applies to credit unions that have the National Credit Union Administration (NCUA) stamp of approval.

If you want to learn more about how the FDIC Insurance Fund operates and was used to restore confidence among consumers, you can?read more here.

In this week's newsletter, we'll unpack how FDIC Insurance limits work, what to do with money above the limits, and discuss alternatives that you may have not considered.

How much does FDIC Insurance cover?

The FDIC states that its standard is to cover up to “$250,000 per depositor, per insured bank, and per each account ownership category."

How to 'double' the FDIC limit

A married couple who jointly owns an account can deposit up to $500,000 and still be fully insured.

What if I have more than the FDIC limit?

What are my options?

1. Open another account at a different FDIC Insured bank.?

After all, there are?more than 4,2000 FDIC?Insured banks.

2. Open another account at a Credit Union that is NCUA Insured

Remember: NCUA also insures up to $250,000 just like FDIC banks and there are over 4,700 NCUA Insured Credit Unions to choose from.

3. Consider opening a?Cash Management Account?with higher Insurance coverage limits.?

Depending on the bank, some CMA's have the ability to insure a client's cash up to $1 million (or more) by spreading out funds across multiple banks.

4. Add a Joint owner?

If you have more than the above limits on hand, it might be wise to open another account with someone else, such as your spouse, to avoid exceeding the FDIC’s threshold.

Remember the coverage rule we mentioned earlier which states that the FDIC insures $250,000?per depositor, per institution, AND per ownership category.

This means you can have TWO different types of account 'categories' and the insurance limits would apply to each.?

5.?Open an account that is IN A DIFFERENT OWNERSHIP CATEGORY

FDIC insurance coverage applies to several ownership categories:

• Single accounts (owned by one person).
• Joint accounts (owned by more than one person).
• Revocable trust accounts
• Irrevocable trust accounts
• Certain types of Retirement accounts, like IRAs
• Business accounts such as Corporations

The ownership category refers to who owns the account — such as a single or joint account — and the account type.

Remember: The keywords here are 'per category

Here's what the Chief Financial Analyst of Bankrate had to say on this topic:

"A married couple can?easily protect a million dollars?at the same bank by each having an individual account and together having a joint account," McBride said."

Should I Move My Money From My Bank Account?

Short answer: NO

Your money in your FDIC-insured bank is not at risk. Especially if you have less than $250,000 in your account.

Are Small Banks also Safe?

Short answer: YES

Despite this, “A lot of the flight to capital to large banks is driven by emotion and not by true risk,” says Michael Finke, professor of wealth management at the American College of Financial Services.

Your money within a small bank is safe and in fact, the FDIC Insurance seal is just as powerful at a small, regional bank as it is at one of the larger Institutions like Wells Fargo or Chase.

Closing Thoughts

Uncertainty can be a really scary thing. When media headlines stoke fear or panic sets in and emotions begin to take over our logic, it's important to ground ourselves in facts and truth.

Finding an Institution with the FDIC or NCUA stamp of approval is a great place to start. Rest assured as long as your Institution has that stamp, your money will be safe.

I hope that you can join us next week as we'll cover more about banks and how to grow your money by adding a high-yield savings account.