Is Your Bank Savings Account Safe?
Do you know what FDIC stands for? Most people don't. You are not alone.
It is important because the Federal Deposit Insurance Corporation is the one that guarantees your money in the (hopefully) unlikely event your bank might go out of business.
Ten years ago the amount of the guarantee was only $10,000. Today it is $100,000. What worries many about this very high amount is does the FDIC have enough money to pay everyone if that awful calamity should occur? Well, don't worry Uncle Sam can turn the printing presses up another notch so everyone will be paid. Of course, it might take a year to get your money, but at least you will get it.
In January the FDIC said they were going to do an "update" on the protection of customer savings accounts at many banks. They said they were going to investigate 65 large banks that had assets of more than 18 Billion. (Yes, that's a B). They did not say what or how they were going to do, but these 65 banks were cited as "problem institutions". They also did not clarify what the problems might be.
Usually this type of "problem" refers to capitalization requirements. Banks should have at least 10% in reserves to pay off any customer(s) who present a demand for their money. Below 8% is considered undercapitalized and under 6% is significantly undercapitalized. Red flags go up and bank examiners show up (I hope).
The FDIC can come in to take over control of the bank and remove present management.
Every bank pays a premium to the FDIC for this insurance. Part of the money is supposed to be set aside to create a reserve in the event of any bank failure. Let's hope this "reserve" is not like the Social Security Trust Fund which is spent every year by the Washington politicians. There Is no Social Security Trust Fund with your money in it.
Is your bank on the hit list? You can ask your bank manager, but it is doubtful he will know. That will be in the far reaches of big corporate headquarters. Will a call there get the answer? Doubtful. Try the FDIC to see what kind of run around is gotten. Maybe an inquiry through the Freedom of Information Act might do it, but how long will that take?
As usual the little guy will be pushed around by the bureaucrats. They don't want him to know what a poor job they are doing.
Don't be "snowed" when your banker tells you they have billions in deposits and not to worry. It is some of the largest banks that are having the worst problems.
About the only action a small investor can take is to spread his money into more than one bank - maybe 3 or 4 depending how much he might have.
No mater how small a savings account a person might have it would be a good idea to separate it into more than one bank.
Al Thomas' best selling book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profitswith his simple 2-step method. Read the first chapter and receive his market letter at http://www.mutualfundmagic.com anddiscover why he's the man that Wall Street does not want you to know. Copyright 2007 All rights reserved
Is Saving Money Your New Years Resolution?
Every new year brings resolutions for most people, which means that it is just as good a time as any to start trying to save a little extra money. As...
Banks Vs Instant Payday Loans - The Real Story
A lot of companies that are fighting against payday loans are banks. The big banking industry has never been a friend of the instant payday loan indus...
An Introduction To Offset Banking
If you've been searching for a new bank account or mortgage, you're quite likely to have come across the term offset banking. It's a relatively recent...
Get on Track With Personal Financial Planning
Personal financial planning is important, and one of the most important things you can do is to come up with a good budget. Every part of your financi...
Why Everyone Should be Looking for Lost Money
If you were one of the millions of kids whose parents opened up a savings account for them when they were young, you're fortunate. It's a great way to...
Affordable Life Insurance - Why You Can’t Beat The Internet Advantage
If you want to get affordable life insurance fast, then you really have one option -- the internet. It is the most efficient way of getting superior c...
22 Ways To Build An Emergency Fund
One of the most important things to have is an emergency fund.If, for any reason, your income stops, your emergency fund should be able to carry you f...
Low Cost Car Insurance - How to Get The Cheapest Rate Possible
It would be nice if car insurance were free, wouldn't it? We all know that's impossible. But what most drivers don't know is that cutting the cost o...
3 Ways to Save Hundreds of Dollars Each Year
Let's face it; it is very hard to save money. Everyone would like to save money, but it always seems like there are urgent expenses and bills to pay....
Savers Unaware Of Interest Rates
Britons could be putting themselves under unnecessary financial strain, new statistics have suggested.According to a study conducted by Sainsbury's Ba...
Strategies For Women To Secure Your Financial Future
Based on studies and researches there are 1.5 million women filed for bankruptcy in 2005 half of them are married and the other half were single, divo...
Students ‘Using Gap Years to Save For Homes’
Students in Britain are increasingly using a gap year to work and save for the deposit for a first home, according to a new study. Twice as many stud...
Save a Little Money Now - Get a Big Reward Later
Saving money. It really doesn't matter who you are, every one wants to save money. You could be a college student trying to make the money you have ...
How to Limit the Effects of Inflation on Your Savings
You have probably heard the proverb; there are only two certainties in life; death and taxes. While this is true, another certainty that should be ad...
Are Universal Prepaid Debit Cards Good for Our Economy?
Universal prepaid debit cards have become increasingly popular in our culture. If you are wondering what they are, they are basically credit cards att...