Expert: Steve Hach - 7/25/2008

Question
I put my money in the first two banks, which is very dangerous,
seehttp://www.bankaholic.com/392/what-bank-will-go-bust/#comments

What is your suggestion? foreign bank? other secure investment?  Thank you.

Answer
Hi SC,

The thing to remember with banks is that if they have FDIC insurance--most do and you will see the decal hanging in the door--deposits are insured by the Federal government up to $100,000 for individual accounts and $250,000 for retirement accounts.

As long as you have less than that TOTAL amount in any particular INSTITUTION--not account, but overall in that entire bank system--the Federal government insures your money.

If you have more than the limit, then you need to deposit the excess in other BANKS--not other branches of the same bank, and not in different accounts at the same bank, but a totally different FDIC bank.

I know there has been news of bank failures recently, but remember that even people at IndyMac got their money as long as it was under the limits of the FDIC insurance program.  However, those whose accounts exceeded the insurance coverage did not get the rest of their money or they will be paid off at lower rates.

The best thing to do is to make sure your accounts are covered by the FDIC and then just make sure you never put more than the max amount in any one company.

Best,

Steve