“Is my money safe in the bank?” may seem a question left behind in older generations. But, for many people, economic instability and the rise of e-banking hacks come with insecurities regarding financial institutions—and that's a fair concern to have. When you deposit your hard-earned cash into a bank, you want to be confident it’s secure.
In this article, we'll explore the signs of a safe bank and red flags to avoid, so you can decide which bank is safe to keep money in.
So, is my money safe in the bank?
Yes—your money is typically safe in any bank or financial institution insured by the FDIC (Federal Deposit Insurance Corporation). However, rather than just focusing on whether your money is secured, you might also want to ask: “How much of my money is safe in a bank?”
The FDIC insures bank accounts up to $250,000 per depositor, per account type, meaning even if your bank fails, your money would be protected within those limits. “If your savings exceed $250K, you may want to open up an account at another bank to make sure that everything you have in a bank is FDIC-insured,” says financial advisor Melanie Musson.
But knowing which bank is safe to keep money in doesn't end with FDIC insurance and how much you’re keeping there. Beyond those factors, the safety of your money also depends on the financial health of the bank and its cybersecurity measures.
Be aware of scams and cybersecurity risks
With all respected financial institutions insured by the FDIC, the biggest risks of banking nowadays are external scams and fraud. Cybersecurity should be a priority concern as hacks and data breaches have become more common.
Check to make sure your bank uses sophisticated encryption technologies to protect personal and financial information. This information must be easy to find in the bank's app and website, as well as the privacy policy and certifications.
After you ensure your chosen bank checks all the security boxes, the ball is in your court. Having an active posture against scams is a must. “The weakest link in protecting your accounts is you; you hold the power to be felled by scams,” Musson says. “If that happens, it’s your fault and not the responsibility of the FDIC.”
It's essential to be proactive. “If anyone calls, texts, or emails requesting information, no matter how legitimate they look, consider this contact a red flag,” the expert advises. “End the conversation and reach out to your bank directly using their verified phone number.”
How to evaluate the safety of a bank? 5 factors to look for
It's crucial to know what makes a bank secure. How can you tell if a bank is trustworthy? Here are some tell-tale signs to watch for:
1. FDIC or NCUA insurance
The first thing you should check is whether your bank is insured by the FDIC or your credit union is insured by the National Credit Union Administration (NCUA). To check if a bank is FDIC-insured, you can use the “BankFind” tool on the FDIC’s website. This tool verifies if your bank is covered by the FDIC.
2. Strong financial health
How to tell if a bank is stable? Look up bank health ratings to ensure your bank isn’t on shaky financial ground. You can research your bank's financial reports on the FDIC website, which show important details like liquidity, loan quality, and profitability.
3. Solid cybersecurity measures
Banks today should have robust online security measures. Look for features like two-factor authentication, encrypted transactions, and alerts for unusual account activity. If your bank doesn’t offer these features, it may be time to reconsider where you store your money.
4. Positive customer reviews
Check online for customer reviews or speak to others who have experience with the bank. Reviews can provide insight into how often account errors and fraudulent transactions happen, as well as how the bank handles customer complaints. You should choose a bank that promptly resolves issues to keep your money safe.
5. High capital reserves
A well-capitalized bank with strong reserves is less likely to fail during economic downturns. The capital adequacy ratio (CAR) measures a bank’s ability to withstand financial stress. While this ratio isn't often advertised publicly, some financial news outlets provide rankings of well-capitalized banks.
How can you be sure your money is safe in a bank? Red flags to avoid
While it's important to know the signs of a stable bank, it’s just as crucial to recognize potential red flags that could put your money at risk.
Poor customer service
If it’s difficult to get in touch with customer service or resolve issues, this could be a warning sign that the bank might not prioritize your needs in a crisis.
A history of lawsuits or regulatory penalties
A quick search for your bank’s name plus “lawsuits” or “penalties” can provide insight into any past misdeeds. Banks that frequently face legal trouble may not have the best track record of putting customer interests first.
Lack of transparency
A trustworthy bank should be transparent about fees, account terms, and its financial stability. If you find it difficult to get straight answers from bank representatives, this is a major red flag.
Unsecure online platforms
In today’s digital age, if a bank doesn’t have a secure online banking platform, it's not capable of keeping your money safely. Ensure that your bank offers HTTPS encryption and other security protocols for online and mobile banking.
Should I keep my money in the bank or at home?
Whether to keep your money in the bank or stash it under your mattress boils down to balancing security, accessibility, and potential growth. Keeping cash at home exposes you to more risks. “If a fire destroys your home, you won’t recoup your losses,” Musson says. “If a thief steals your savings, it’s unlikely you’ll get them back.”
Stashing money in your howm also limits your chances of growing your wealth. That money doesn’t earn interest and is also at risk of losing value due to inflation.
A key advantage of keeping your money in a bank is that it has the potential to grow. With your funds safely in a bank, you have the opportunity to move that money into investment vehicles—like stocks, bonds, or mutual funds—that could generate even higher returns over time.
Is my money safe if a bank goes bust? What happens to your money in the bank when the economy crashes?
Even if the economy crashes or the bank fails, you won’t lose your money within the FDIC-insured limits.
Bottom line: Stay informed and vigilant
Your money is generally safe in a bank if the institution is FDIC-insured and follows proper safety protocols. However, staying informed about your bank’s health, its cybersecurity efforts, and any warning signs can help you avoid financial issues in the future. If you ever feel unsure, don’t hesitate to switch banks—there are plenty of secure, well-rated options available.
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