Headlines about banks failing are scary. The thought of paying higher taxes to bail them out is infuriating. But what does it mean to you if your bank fails?
The money in your account will be safe, since deposits up to $100,000 are insured. But you may be inconvenienced. For example, when one New York bank was closed for an FDIC investigation on the Friday before a long weekend, its customers could not cash paychecks or deposit or withdraw money for four days. To make matters worse, they couldn't use their ATM cards. If all your money is in one bank, knowing the signs of trouble are important.
The money in your account will be safe, since deposits up to $100,000 are insured. But you may be inconvenienced. For example, when one New York bank was closed for an FDIC investigation on the Friday before a long weekend, its customers could not cash paychecks or deposit or withdraw money for four days. To make matters worse, they couldn't use their ATM cards. If all your money is in one bank, knowing the signs of trouble are important.
- Read bank mailings and newspapers for word of "restructuring."
- Note unexplained changes in service--a sharp decrease in the number of tellers, elimination of special services (like safe-deposit boxes).
- Watch interest rates on savings accounts. A sudden hike above the market average usually means the bank needs more of your money. You can benefit, but be aware of the implications.
- Monitor the bank's stock price for sudden drops.
If you note any of these changes, consider setting up a back-up account...just in case.
