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Thanks to Deposit Insurance, Your Money is Safe in the Bank

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Thanks to Deposit Insurance, Your Money is Safe in the Bank

Savannah Holley works the drive-through bank counter at Mount McKinley Bank in Fairbanks, Alaska. Tina Russell/Codetic

The coronavirus pandemic has triggered massive unemployment and sent tremors through the world financial system. 

With all of this uncertainty, it’s fair to wonder if it is safe to deposit your money in the bank or if you should start thinking about the old coffee-can-full-of-cash-buried-in-the-back-yard strategy. 

The short answer is yes, your money is safe. There is little reason to expect banks to fail during the coronavirus pandemic. But even if your bank hits trouble, your money is protected by deposit insurance provided by the Federal Deposit Insurance Corp.

What is the FDIC?

The FDIC is a federal agency whose primary function is to protect depositors’ money from bank failures or fraudulent activity. Created in 1933, the FDIC was established after many banks failed during the Great Depression.

Each depositor is covered up to $250,000, and accounts with different legal ownership are insured separately. If you have savings accounts at three different banks, you are covered up to $250,000 in each one. Or if you own a savings account and a joint checking account at a single bank, are covered separately up to $250,000. The FDIC’s website proudly proclaims (several times) that “since 1933, no depositor has ever lost a penny of FDIC-insured funds.” 

The FDIC covers basic checking and savings accounts, CDs, money market accounts, IRAs, trust accounts, as well as employee benefit plans. Deposit insurance does not cover life insurance policies and investments such as stocks, bonds, mutual funds and annuities.

How Does the FDIC Work?

Like any other insurance company, the FDIC is funded by the insurance premiums paid to it by member banks for protection from bank runs. Bank runs happen when customers get nervous about a bank’s solvency and take their money out. If the situation snowballs, banks can ultimately run out of money and fail, taking down the economy with them. 

If the worst-case-scenario happens and a bank goes under, the FDIC steps in to reimburse customers for their deposits. The FDIC does not have to warn you ahead of time about a bank closure, but they post information at 877-ASKFDIC or at

Beware Email Phishing Scams

Email phishing is in high gear as people are distracted and worried about their finances. Scammers send emails claiming to be the bank, or even the FDIC itself, requesting that you verify some information. It’s just a trick to convince you to give out your banking passwords or account numbers. 

The FDIC has posted this warning on its website:

During these unprecedented times consumers may receive false information regarding the security of their deposits or their ability to access cash. The FDIC does not send unsolicited correspondence asking for money or sensitive personal information. The agency will never contact people asking for personal details, such as bank account information, credit and debit card numbers, Social Security numbers, or passwords.

Consumers may also be contacted by persons who claim to be employed by an agency, bank, or another entity. These scams may involve a variety of communication channels, including emails, phone calls, letters, text messages, faxes, and social media. Scammers might also ask for personal information such as bank account numbers, Social Security numbers, dates of birth, and other details that can be used to commit fraud or sell a person’s identity. Consumers should not provide this information.

If you have any doubts about the validity of an email, do not click on any links or attachments.

Tips to Keep Your Deposits Safe

In a time of economic uncertainty, there are a few things you can do to help keep your money safe.

  • Only open accounts with FDIC-insured banks. You can usually find the FDIC logo at the teller window, front door, or on the bank’s website.
  • If you have more than $250,000 to deposit, spread the wealth. Break the amount into smaller chunks and spread them to various banks or accounts so that the full amount will be covered. 
  • Be smart about digital banking. Protect your account with a complex password and change it routinely. Conduct banking transactions only on a secured internet connection.

Tyler Omoth is a freelance writer covering topics from personal finance to career advice and even lawn care. His work has been featured on, and more. He is also the author of over 70 educational books for children and a proud parent of twin toddlers. 

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