Is my money safe? What you need to know about bank failures

NEW YORK (AP) — The latest failures of Silicon Valley Bank and Signature Bankwhich mainly catered to the technology industry, can make you worry about your money. They were the second and third largest bank failures in US history.

It all started last week when too many depositors tried to withdraw their money from Silicon Valley Bank in Santa Clara, California. It is known as a bank run.

The bank had to sell government bonds and other securities at a huge loss, and more people continued to try to withdraw money as word of the situation spread, causing the bank to fail. Regulators seized control of New York-based Signature Bank soon after, said it was necessary to protect depositors after too many people withdrew money.

In response, regulators guaranteed all deposits at the two banks and created a program to help shield other banks to shield them from deposit runs.

Here̵[ads1]7;s what you need to know:

IS MY MONEY SAFE?

Yes, if your money is in a bank insured by the Federal Deposit Insurance Corp. and you have less than $250,000 there. If the bank fails, you get the money back.

Almost all banks are FDIC insured. You can look for the FDIC logo at teller windows or at the entrance to your bank branch.

Credit unions are insured by the National Credit Union Administration.

If you have more than $250,000 in an individual account, which most people don’t, the amount above $250,000 is considered uninsured, and experts recommend moving the rest of your money to another financial institution, said Caleb Silver, editor-in-chief of Investopedia., a financial media website. Joint accounts are insured up to $500,000.

Federal officials have taken steps to ensure that other banks are not affected.

“You shouldn’t be too worried about your money if it’s in one of the bigger banks, and even some of the regional banks and credit unions,” Silver said.

CAN I TELL IF MY BANK WILL FAIL?

If you’re worried about your bank closing in the near future, there are a few things to watch out for, according to Silver:

— Look at the share price of your bank.

— Follow the quarterly and annual reports from your bank.

— Start a Google alert for your bank in case there is news about it.

You want to make sure you’re paying close attention to the way your bank is behaving, Silver said.

“If they’re trying to raise money through a stock offering or if they’re trying to sell more stock, they may have problems with their balance sheet,” Silver said.

SHOULD I LOOK FOR ALTERNATIVES?

If you have more than $250,000 in your bank, there are a few things you can do:

— Open a joint account

You can protect up to $500,000 by opening a joint account with someone else, such as your spouse, said Greg McBride, financial analyst at Bankratea financial company.

“A married couple can easily protect a million dollars in the same bank by each having an individual account and together having a joint account,” McBride said.

— Move to another financial institution

Moving your money to other financial institutions and keeping up to $250,000 in each account will ensure your money is insured by the FDIC, McBride said.

— Do not withdraw cash

Despite the recent uncertainty, experts do not recommend withdrawing money from your account. It is safer to keep your money in financial institutions rather than at home, especially when the amount is insured.

“This is no time to pull your money out of the bank,” Silver said.

Even people with uninsured deposits usually get almost all of their money back.

“It takes time, but generally all depositors — both insured and uninsured — get their money back,” said Todd Phillips, a consultant and former attorney at the FDIC. “Uninsured depositors may have to wait a bit, and may have to take a haircut where they lose 10 to 15% of their savings, but it’s never zero.”

___

Associated Press writer Ken Sweet contributed to this report.

___

The Associated Press receives support from the Charles Schwab Foundation for educational and explanatory reporting to improve financial literacy. The independent foundation is separate from Charles Schwab and Co. Inc. AP is solely responsible for its journalism.