The Silicon Valley Bank (SVB) closure is significant financial news, leaving many people wondering what happened—and how it might affect them. SVB, which was based in California and served many tech and start-up customers, collapsed. Understandably, SVB customers were worried about their money, and the incident sparked broader concerns about bank collapses.
The Federal Deposit Insurance Corporation (FDIC), a government corporation focused on stability in banking, took over at SVB to prevent customers from losing their funds. Ordinarily, the FDIC caps insurance limits at $250,000 per account (or $500,000 for a joint account). However, the FDIC is insuring all deposits for SVB, including those above the standard limit, to mitigate the risk to the financial system more broadly.
Although you might not have been an SVB customer, news about bank collapses can raise important questions about how to keep your money safe.
What types of accounts are FDIC insured?
The FDIC insures several different types of accounts, including the following:
- Single accounts
- Joint accounts
- Trust accounts
- Some retirement accounts (including IRAs, 401(k)s, and profit-sharing plans)1
The FDIC insures accounts for up to $250,000, which means that your money is protected in the event of a bank collapse.
You can sometimes have multiple FDIC-insured accounts at the same bank, provided you save your money in separate ownership categories.
How do I know if my accounts are FDIC insured?
Banks that are FDIC-insured want you to have that information! Check your bank’s website for the FDIC logo or language like “member FDIC,” call and ask a representative, look for an FDIC sign at a local branch, or use the FDIC’s BankFind tool.
If your bank balance is over $250,000, remember that FDIC insurance usually covers up to that amount. Here are some strategies to consider:
- Open another account at a different bank
- Add a joint owner (the FDIC insures joint accounts for up to $500,000)
- Move some of your money to another category (like a trust, government account, or insured retirement account)
- Use a cash management account
- Look for a bank that offers FDIC and DIF insurance
- Join a credit union
If you use a credit union, know that the FDIC does not insure credit unions—only bank accounts. However, that doesn’t mean credit unions aren’t insured! The National Credit Union Administration (NCUA) oversees credit unions, and it offers coverage up to $250,000.
What should I do to keep my money safe?
Although bank closures are rare, they can happen. Here are some things that will help you create a backup plan if you lose access to your account.
First, know your numbers. Determine how much money you need to cover essential expenses like rent or mortgage, food, insurance, and transportation. Keep that amount readily accessible.
Second, consider spreading your emergency fund across multiple financial institutions - and take advantage of high-yield savings accounts if you do! Keeping your emergency fund in multiple accounts means you’re less likely to spend that money and ensures you have money available if you lose access to one account.
Reducing financial anxiety
The good news is that most consumers are unaffected by the SVB collapse. Bank collapses are rare, but the possibility of losing access to your money is stressful. Always have a backup plan to access enough money to meet your basic needs, and seek out FDIC-insured banks for additional peace of mind.
Prepared by a third-party.
1. FDIC (2023, Mar. 14). "Are My Deposit Accounts Insured by the FDIC?" https://www.fdic.gov/resources/deposit-insurance/financial-products-insured/index.html
