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Crisis of Confidence: Is Your Bank Safe?

Perception is reality, they say.

That’s why, as investors continue to lose confidence in the financial system, the effect cascades to bank customers, who lose faith in the stability of their institutions. Millions of depositors are still pulling cash out of banks they perceive to be risky. This migration of money is mostly a knee-jerk reaction, caused by anxiety from the events of the past few months that include those indelible pictures of long lines of customers lined up to get their money out of failed banks like IndyMac.

But it is crucial to remember, Carmen says, that when a bank goes belly up the FDIC immediately moves in. And while you might not trust your bank entirely, you can trust the FDIC – no depositor has ever lost a cent in an FDIC-insured account.

Even still, nearly one-third of consumers recently surveyed say they’re concerned about the safety of their personal savings.

As long as you have less than $250,000 in an FDIC-insured bank or NCUA-insured credit union, the health of your banks is really “not your problem,” according to Bankrate Senior Financial Analyst Greg McBride. Most bank failures are, as far as the average person is concerned, really just bank mergers anyway. The FDIC painstakingly works to find buyers for banks on the brink of failing, so they often get scooped up before the failure materializes, leaving you even less reason to worry about the safety of your money.

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