Why Your Money is Safer in a Bank (2024)

FAQs

Why Your Money is Safer in a Bank? ›

The FDIC insures up to $250,000 per depositor per FDIC-insured bank. In the nearly 90-year history of the FDIC, no depositor has ever lost a penny of an insured deposit due to a bank closure.

A bank account is typically the safest place for your cash, since banks can be insured by the Federal Deposit Insurance Corp. up to $250,000 per depositor, per insured institution, per ownership category. Banks that are insured by the FDIC often say “Member FDIC” on their websites.

The FDIC insures your bank account to protect your money in the unlikely event of a bank failure. Bank accounts are insured by the Federal Deposit Insurance Corporation (FDIC), which is part of the federal government.

Money that isn't in a deposit account isn't protected by FDIC insurance, so if it's stolen or lost in a natural disaster, it can't be replaced. Plus, keeping your funds in a deposit account ensures that they are earning interest on your behalf.

Both SIPC and FDIC insurance protect your assets in the event of a failure at member institutions. The biggest difference is that FDIC coverage protects your bank deposits and assets, while SIPC coverage protects your securities with a brokerage firm.

Placing your money in a federally-insured and highly regulated bank ensures that your hard-earned funds are protected and available when you need them. Alternatives to a bank account, like keeping your money at home, places you at risk of losing your cash to burglary, theft, fire, floods, or other potential disasters.

U.S. government securities—such as Treasury notes, bills, and bonds—have historically been considered extremely safe because the U.S. government has never defaulted on its debt. Treasury securities may pay interest at higher rates than savings accounts, although it depends on the security's duration.

Generally, money kept in a bank account is safe—even during a recession. However, depending on factors such as your balance amount and the type of account, your money might not be completely protected.

Why do you think keeping money in banks is safer than at home? ›

Honestly, there is no safe or guaranteed way to store money outside of a bank. If your house is broken into, your cash, especially large amounts will not be covered by insurance. Banks are FDIC Insured. If a bank is robbed, your money is still safe.

Bank accounts can make paying bills and managing spending easier. And a savings account provides a convenient place to keep cash you may need in an emergency.

Most deposits in banks are insured dollar-for-dollar by the Federal Deposit Insurance Corp. This insurance covers your principal and any interest you're owed through the date of your bank's default up to $250,000 in combined total balances. You don't have to apply for FDIC insurance.

The government has no regulations on the amount of money you can legally keep in your house or even the amount of money you can legally own overall. Just, the problem with keeping so much money in one place (likely in the form of cash) — it's very vulnerable to being lost.

Bank accounts are safe

Your money will be protected from theft and fires. Plus, your money will be federally insured so if your bank or credit union closes, you will get your money back.

Saving money is important for the future — this is something we all learn as children. The safest way to do this is to put your savings in a bank account. After all, in your account, your money is free from most risks and can slowly accumulate over time.

In fact, banks are safer than keeping a large amount of cash in your wallet or under your mattress. That's because banks have security systems and technologies to protect your money against theft and fraud. Protection from fire, flood or theft. Cash can be stolen, damaged or destroyed.

A regular savings account is "liquid." That is, your money is safe and you can access it at any time without a penalty and with no risk of a loss of your principal. In return, you get a small amount of interest.