Phew – what a wild ride in banking these last few weeks. Let’s just take a deep breath and go over what you need to know and how it affects your finances.
First off, the U.S. is pretty much the most secure economy to save and invest in. Why? Because the U.S. government backs up bank deposits through FDIC insurance up to the limit of $250k per person per institution and even more if you have multiple accounts with different account titles like a joint and individual account at the same institution. So even if your bank shutters, the U.S. government is good for the money. And if the U.S. government fails, we have much bigger, The Last of Us-level problems like FEDRA and raiders, not FDIC-insured deposits.
That said, it’s concerning to see banks, which we rely on for our daily financial needs to up and close overnight. So far, the banks most affected have been medium-sized regional banks. While it’s troubling, these things can and do happen and there’s no cause for panic because the U.S. has a system and playbook for this type of thing. Here’s what you can do to protect yourself:
- Double check that you don’t have deposits over the FDIC insured limit of $250k for individual accounts / $500k for joint accounts in any one institution. If you do, consider spreading across multiple institutions or utilizing our partnership with Flourish cash, which deposits funds across institutions, increasing FDIC insurance to $1.25M for individual accounts and double that for joint accounts.
- While there’s no need to panic, a backup plan never hurts. So far the U.S. has intervened swiftly and aggressively to contain the fallout, making deposits available to customers of shuttered banks. But if you couldn’t access your bank account for 24-72 hours, what could you do to have a Plan B in place? It doesn’t hurt to have some money deposited at a big bank that is less likely to be affected.
- Keep an eye on interest rates. This might change the course the Fed takes on interest rate hikes and interest rates on savings and loan products. The market events have already at least temporarily lowered mortgage rates.