How to Know If Your Money Is Safe

Pictures and news are coming out of California that I never thought I’d see again: lines of people making a run on a bank—a formerly big bank—in a panic about their money. The police were called in as balances and interest disappeared and answers didn’t come fast enough.

Granted, we have a ways to go when it comes to the repercussions of the mortgage lending mess, but we, as depositors, have control over one thing: where we put our money. If you have an account with FDIC insurance, you should never be in a line at the bank to pull your money. Here’s a walk-through of how you can make sure your money is safe:

1) Confirm that your deposits and banking institution has FDIC insurance. If you’re not sure, head to and check.

2) Know that FDIC insurance is aggregate—meaning, it’s not $100,000 of insurance on each your checking and savings accounts but your holdings as a whole. To find out which of your accounts is insured, and which is not, use the FDIC’s EDIE tool.

3) Know the guidelines: Insured up to $100,000 = savings, checking, CDs, trusts. Insured up to $250,000 = Individual retirement accounts (IRAs) which include 401(k)s, 403(b)s and Roths. NOT insured = investments such as stocks, bonds, mutual funds, life insurance and annuities.

If you have more than the insured limit at a bank or institution, spread your money around between banks such as $90,000 at Bank G and $40,000 at Bank B, etc.

Some folks who made a run for their insured money at IndyMac couldn’t get it all out within a day or so but they will. It is insured. That’s why the FDIC was formed after the Depression—to protect our funds. Banks may do funny stuff (subprime lending, for example) that has an effect they didn’t plan for, but we can make sure that we don’t give them our business beyond what is insured.

Were you an IndyMac customer? Are you worried about a run on your local or regional bank? I want to hear from you. Write me at or just fill out the form below.

Don’t forget using POD’s to get more coverage. Also, the FDIC has an FDIC calculator on their website for determining coverage. --Chris

Posted on: 17 Jul 2008 3:42 A.M.

I feel that the money that FDIC provides to the disolved banks depositors should goto the bank of choice of the depositor as a wire transfer up to the max of coverage. Then any remaining balance owned the depoitor by the defunked bank should be covered by the sale of the assets of the failed bank to whatever amount can be raised to refund as much of the depositors and state deposit. --Keith, NC

Posted on: 16 Jul 2008 11:49 P.M.

Thanks for the good advice not telling people to run for the hills with their bank balances. Spreading out your deposits among institutions is a great way to ensure that your money is safe. One thing you left out is that there are ways that you can increase the amount of insurance you have available though if you have joint accounts or by adding beneficiaries to your accounts. That might be good thing to mention. I work in a bank and this last week we have been bombarded with questions and requests to pull money out of their accounts when they really don't absolutely have to.

Thank you for your great posts and keep up the good work! --David

Posted on: 16 Jul 2008 10:26 P.M.