afraid of bank

[wrighteer474]

- i am afraid of bank bankruptcy.. i don'r want to lose my saved money.. any suggestions there that can enlighten me....

[Joan.of.the.Arch]

Have you kept up with ratings on your bank at bankrate.com? That can give you some indication of your bank's health. You can also read the read about your bank when it is in the news. A Google news alert is good for catching news articles containing the name of you bank.

I don't even know of any banks in the US whose deposit accounts are not covered by the Federal Deposit Insurance Corporation, FDIC. They insure up to $250,000 of an individual's deposit in the case of bank failure.

And yes bank failure does happen. There is a blogger on this site who I think has been through 3 different bank failures in the last few years.

FDIC: Federal Deposit Insurance Corporation

[naomibatac]

Bankruptcy can cause negative effect on your score. Therefore, if you are afraid of bankruptcy, avoid wrong use of your credit lines. If ever you will have heavy credit card debts, consider credit card debt consolidation in order not to resort to filing of bankruptcy.

[bjl584]

Originally Posted by wrighteer474

- i am afraid of bank bankruptcy.. i don'r want to lose my saved money.. any suggestions there that can enlighten me....

Your money is federally insured up to $250,000. If I had more than that in cash I would spread it around amongst different banks regardless of how healthy I thought that any one bank's balance sheet was.

[jpg7n16]

Originally Posted by naomibatac

Bankruptcy can cause negative effect on your score. Therefore, if you are afraid of bankruptcy, avoid wrong use of your credit lines. If ever you will have heavy credit card debts, consider credit card debt consolidation in order not to resort to filing of bankruptcy.

The OP was not talking about personal bankruptcy, but rather is afraid that his banking institution will file bankruptcy.


Just to be clear for the OP - if your bank goes under, it will have no effect on your credit score.

As others have already pointed out, your funds are FDIC insured at each bank. So unless you have over $250k at a single bank, there would be no loss of funds. It would obviously be a hassle to change banks and get your money, but you'd be protected in the end.

And if you DO have that much at a single bank, you probably have too much of your portfolio in cash.

[thefrugallery]

As many people have already said, the FDIC covers up to $250,000 in protection in case your bank goes under. But depending on how you title these accounts, you may be able to get more than $250,000 per bank covered. If you don't want to mess around with it, you can always deposit your momey in multiple banks. The FDIC coverage is PER bank so spread out your risk and you should have no problem!

[AceBarks]

Say Bank of America goes bankrupt. Do you really think the federal government will be in a position to pay everyone back?

Sorry, but I am a bit of a cynic in this regard.

[photo]

Originally Posted by AceBarks

Say Bank of America goes bankrupt. Do you really think the federal government will be in a position to pay everyone back?

No, but Congress keeps spending money it doesn't have, so why should the future be any different?

[AceBarks]

Originally Posted by photo

No, but Congress keeps spending money it doesn't have, so why should the future be any different?

Agreed. They could print that money. And if, dare I say when they do, it would be an incredibly devalued $250,000 dollars.

[jpg7n16]

Originally Posted by AceBarks

Agreed. They could print that money. And if, dare I say when they do, it would be an incredibly devalued $250,000 dollars.

They wouldn't need to print any more money for that. Even if Congress printed more money, the FDIC wouldn't use it.

FDIC insurance is just that - insurance. Paid for by premiums from banks.

From: FDIC: Who is the FDIC?

The FDIC receives no Congressional appropriations – it is funded by premiums that banks and thrift institutions pay for deposit insurance coverage and from earnings on investments in U.S. Treasury securities. The FDIC insures more than $7 trillion of deposits in U.S. banks and thrifts – deposits in virtually every bank and thrift in the country.

[AceBarks]

Originally Posted by jpg7n16

They wouldn't need to print any more money for that. Even if Congress printed more money, the FDIC wouldn't use it.

FDIC insurance is just that - insurance. Paid for by premiums from banks.

I'm pretty certain those premiums only cover a fraction of the deposits. There is a reason the government just asked the biggest 31 banks to simulate an economic collapse. Taken from an article on CNN today:

"Companies: Late Tuesday, the Federal Reserve also ordered the top 31 U.S. banks -- with assets of $50 billion or more -- to participate in stress tests that will simulate another financial crisis.
Tests will simulate a more severe global financial meltdown for six banks with the largest trading operations: Bank of America, Goldman Sachs (GS, Fortune 500), Citigroup (C, Fortune 500), JPMorgan Chase (JPM, Fortune 500), Morgan Stanley (MS, Fortune 500) and Wells Fargo (WFC, Fortune 500)."


Anyways, I don't mean to derail the discussion. I am just a cynic when it comes to our government's regulations of the banks and investment houses. However, I continue to invest in my 401k and am not suggesting people don't use banks or stop investing money.

[Osburt55]

The question is this: How much flow are we talking about here?

This is either a nothing or it's a precursor to a really, really big ...

Which is it? I don't know. But the banks over in Europe this morning, especially BNP, are acting like it's the "Big Bada-Boom" that's inbound - right now.

The lack of transparency and demonstrated willingness to lie - including, in fact, European ministers openly stating that when things are bad you have to lie - is a huge problem.

There are many who claim that we can "ward off" crisis with the ECB and such stepping in to "save" people "as required." The fact of the matter is that we're right back where we were in the 2007/08 mess when it became clear that lending people money who you know can't pay you back is not a sustainable business model.

How long will we continue to play this game where we have 2% moves in the market in the space of hours or minutes and "contagion" continues to percolate while investor confidence is decimated? Eventually this sort of volatility and the plethora of lies results in a bid collapse into one of those volatility spikes.

This is not how you get a market decline -- it's what generates crashes.

There is only one solution: The truth. It involves acceptance of pain, which nobody is willing to do in the present tense, yet there is no way around it. The longer we play "extend and pretend", the more we lie and the longer the games go on the worse the situation becomes both here and abroad.

We in fact learned nothing from 2008 - we simply gave a bunch of whining children on Wall Street that had just smashed their fingers with a hammer a candy bar, and we didn't even have the dollar to buy the candy with.

[jteezie]

Back on topic...

The government watches banks quite closely, so they know in advance when a bank is going to file bankruptcy. The bank and the government work together to find another bank to buy out the assets (buy the customers) of the old bank, then the FDIC insurance covers whatever difference to make the new bank "whole".

Impact on you... you automatically transfer to a new bank. You might eventually have to setup a new online login and maybe go to another bank location if they close down the old locations, but that's about it.

PS. A lot of businesses that go bankrupt don't just go out of business. They're bought by investors who can try to turn it around, absorb it (take the customers) change the name, sell it in parts, write off the debt to save on taxes in their successful businesses, etc.