This year was been terribly for the banks, with eight bank failures in the US in August. Money in the bank was always considered the ultimate in security, but after the emergency bankruptcy of Lehman Brothers, business owners are wondering if their money safe in their bank.
What You Need To Know
Most banks are protected by federal insurance. The first thing you need to check is if your deposits are within FDIC insurance coverage limits.
The FDIC(Federal Deposit Insurance Corporation) guarantees the safety of deposits in member banks up to $100,000 for deposits per bank. However, not all banks are participating in the TLGP/TAGP.
Also, the FDIC insures for individual retirement accounts(IRAs) and Keoghs to help people save for retirement, insured up to $250,000. FDIC ensures, savings accounts, certificates of deposit, checking accounts, and money market accounts.
How To Maximize Coverage
Any insurance depends from different situations. For example a married couple can open two individual account and one joint account(insured up to $200,000) for a total of three account per family. In this case they can increase coverage up to $400,000.
Another way to increase coverage is that to open multiple account with different bank. FDIC insurance give you no limit at the number of bank account you can open.
If you want to see how stable a particular bank is, you can use Bank’s & sound rating system. It’s a system that provide information on the relative financial stability of U.S. banks. The system provides 22 tests to each bank to check:
- Profitability
- Asset quality
- Liquidity
- Capital adequacy
When people lose more money than what is covered by insurance they automatically become a creditor of the failed bank’s. No panic, in this case you are the first to get money back when selling the asset of the failed bank.
In the end, here are the three simple steps needed to protect your business finances:
1. Know where invest your money first. The Treasury securities are an example of secure investment because they are backed by the governments and including Treasury bills, notes, and bonds.
2. FDIC insurance doesn’t cover life insurance policies, bond, mutual funds, stocks.
3. For people have more then $100,000 and they didn’t have access to their money immediately, they need to think to an alternative plan.
