In today’s video, I’m going to talk about what to do before the next bank failure (five money to-dos during a banking crisis) – basically what you should do now to protect & grow your hard-earned cash during these uncertain times, post-SVB collapse.
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LEARN MORE ABOUT: Bank Failures
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The current economic instability brought about by the COVID-19 pandemic has raised concerns about the possibility of a banking crisis. A banking crisis occurs when a bank becomes insolvent, and the government steps in to bail it out. This situation can be chaotic and cause a lot of panic among depositors. As much as we do not have control over such situations, there are things one can do before and during a banking crisis.
Before the next bank failure, here are some money to-dos:
1. Diversify Your Deposits
One of the ways to protect your deposits is by putting your money in different banks. Having multiple accounts can ensure that a single banking crisis does not wipe out all your savings. It is advisable to spread out your deposits and to keep abreast of the bank’s financial status, credit rating, and the frequency with which it changes its interest rates.
2. Review Your Insurance Policies
Take time to review your FDIC or NCUA coverage, as this guarantees deposits of up to a certain amount in the event of a bank or credit union failure. Make sure that your accounts fall within insured limits. If you hold accounts above these limits, it is best to spread them across different banks.
3. Keep Your Records Up to Date
In the event of a bank failure, it is essential to have records of your deposits and transactions. Keep a copy of your statement, bank agreement, and other contracts between you and your bank. Have copies of your check images, deposit slips, and bank correspondence in a safe place.
4. Have Access to Cash
In a banking crisis, it may be impossible for depositors to access their funds for a period of time. Therefore, it is advisable to keep some cash at home. It is also crucial to keep this money in a secure location that is only accessible to you.
5. Choose Legal Representation
In the event of a bank failure, it would be wise to have an attorney in your corner. They can guide you through the legal processes and help you recover your deposits.
During a banking crisis, there are several money to-dos that one can implement:
1. Stay Calm
Panicking during a banking crisis is understandable, but it can lead to bad decisions. Take a moment to breathe and gather information before making any significant moves.
2. Assess the Risks
Find out what you stand to lose, what you can recover, and what you need to do to protect yourself. Remember, some deposits may not be insured.
3. Be Patient
The legal process of recovering your deposits will take time. Be patient and work with your legal representative to ensure that your rights are protected.
4. Have a Backup Plan
In the worst-case scenario, have a backup plan in case your deposits are not recoverable. Have an emergency fund and be prepared to tighten your financial belt for a while.
5. Stay Informed
Keep up to date with the latest news regarding the banking crisis. Government intervention and bailout plans can significantly affect the situation.
In summary, banking crises can be nerve-wracking, but there are things we can do before and during such events. By diversifying your deposits, reviewing your insurance policies, keeping your records up to date, having access to cash, and choosing legal representation, you can protect yourself before a banking crisis hits. During the crisis, it is essential to stay calm, assess risks, be patient, have a backup plan, and stay informed.
Thanks for visiting our personal finance channel! We hope this free content will help fast-track your financial journey! Everyone's financial journey is different. Please note that there are questions/ comments which I will not be able to answer without fully understanding your financial, personal & other circumstances.
WATCH NEXT
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⭐ Bankageddon | Silicon Valley Bank, The FDIC & A Contagion Of Bank Defaulshttps://youtu.be/0UcggDp5pGE
⭐ What Is A Bank Bail-In: https://youtu.be/N18FH9jQPnI
Just remember her example of Treasury Securities locks your money up for 10 years.
Are you sure you won’t need that money for 10 years?
So, can an IRA be converted to a CFI? Or would a transfer to an IRA at my CU be. Better option?
FDIC protection – as I understand it – is only in the case of the bank failing. What if a hacker raids only my account? Am I protected?
I think intrest will go between 7 and 8% . That would be great for savers ,and not to high for buying things. It should NEVER have been 0.
Ally on line bank is FDIC and has versatile cd offerings, though I admit I do not know their status.
I have been told that FDICD Doesn’t have enough money to cover all
Jennifer, First and foremost Thank you. I have followed your advice and bought I bonds in personal and a Trust Account that you showed us how to set up. Also have an on going 13 Week ladder i T-Bills. My quesyion if you will is the trust account. I have learned I need to "FUND" the trust. Could you share how I go about changing my personal-joint account to my Trust? thanks again for sharing your knowledge…..Ron
Easy to open bank account..Yes. How do I get access to the account? No document sent with account number, no access to the phone number used for security during setup, No current balance information, etc. All I have is emails telling me the account has been suspended for no activity (log on to reactivate). Call to customer service asks for security information I don't have access to. Is there a standard way to reaccess an "inactive" account when you can't get past customer service?
Can you please do a video on how you can up your FDIC coverage by simply adding beneficiaries to your account. Up to 5 gets you $1.25mil coverage.
I suspect that bailing out all of the large multimillion $ accounts at such as SVB costs more than an increase in the deposit insurance amount to $ One Million since there would be fewer runs on banks and fewer banks needing to be "rescued".
It is time for the FDIC and NCUA minimum insured amounts to be increased to one million $. $250,000. does not buy as much house now as $10,000. did when the FDIC limit was $10,000. Inflation stinks,results in more revenue for the Government but the Government needs to step up to some of its responsibilities and spend some of that windfall.
(Inflation does such things as exposing you to IRMAA medicare penalty rates and having 85% of your Social Security taxed even though your actual spending power has decreased.)
FED is selling bonds and Tnotes. So bonds go down.
The Feds will stop the raise in rates. We are in unprecedented times where even the Fed does not know what to do.
Yes please further explore the notifications on down grades for a bank.
Which are the 5 best and safest investment banks in USA?
One roof Chase Bank (Fast Bank) and Capital One (Slow Bank) Linked to Acorns.
thank you, Jennifer, for being so informative! I'm very young looking to learn more about financial allocation. You made some great points. So now I'm subscribed!
I just opened a couple of 12 month CDs with Midfirst bank! One at 4.75 and the other ten days later at 4.66! I asked them to tell me about their bank! They said they were privately owned and very conservative which made me feel better! I also have a high yield savings account with them paying 3.5.
very useful, thanks so much 🙂 – my prediction is, rates will go to 12%
Would love to hear what caused the run on SVP Bank. Was the call from Moody’s leaked?
Do you ever recommend moving some of 401 or roth into precious metals like gold and silver?
I’m being offered 4 percent for a money market business account from Webster bank in Ny
Though I’m inly putting 250,000 into account am I better off putting money with chase or fidelity
Or buying 3 month treasury
Many are worried about their money. I am more worried about the future value/buying power of my money after the FED bails everyone out AGAIN. Moral Hazard BUST
You asked about additional bank accounts… When I did my Major move and had extra money in the account after selling a couple of properties. I decided to have a couple of banks instead of just one. I had been using Wealthfront for Robo, investing and retirement planning, and then they opened cash accounts. So I decided to use that as my second bank. Currently the rate is 4.30% and FDIC insured up to $2 million.
Rates will have to be above the inflation rate.
Deep dive SIPC please!!
Do you consider the capital one 360 cd safe? I invested in the 5% 11month cd but all this bank drama has me worried! thanks
I'm not sure how I got interested in T Bills, but over the last two weeks I've been watching videos from your channel and others. From the research I've been doing with bank savings accounts, I've found the laddering concept very attractive and have set up a couple and am just waiting for the next 8 weeks to roll by so the cycling can start. I'm keeping it just in the 4 week ones, and also have a larger $ amount 4 week for an experiment, as I'm thinking of instead of having money in an interest bearing account, simply front run the banks and take the full amount of the earned interest without them taking their "cut". Imagine that, the public beating the banks at their own game!! PS: I'm going straight to the source, Treasury Direct.
what about annuities from insurance companies? Are there any kinds of "insurance" on that money?
I’ve heard the FDIC actually could only return .03¢ on the collar if there was a real bank run. Now that they’ve insured higher deposits as well, they could only return .01¢ to everyone. Can you address that? Is FDIC still useful?
SIPC deep dive – yes, please
N.A. stands for “National Association,” another name for the National Bank category, not North America. Good info, new subscriber. Retiree with emergency savings in a low-yield, but safe, credit union savings account.
The Fed needs a total market crash so I say we will have a slight pause if things continue to get out of hand there will be another 25 bpts raise and will continue incrementally until congress steps in …
Are penalty withdrawals from a cd tax deductible
Are credit unions fdic protected?
Rates will go higher and higher till 2024!
T bills non taxable in CT at a 6% savings compared to a bank account. What is the savings on a 5% bank cd