Why are people withdrawing money from banks?
Put simply, a
A recent CNBC Select and Dynata Banking Behaviors Survey found that 40% of respondents who reported having withdrawn cash from their savings say they did so to cover fixed bills, such as a car payment. The second most cited reason, at 38%, was to cover variable expenses like groceries.
Your money is safe in a bank with FDIC insurance
A bank account is typically the safest place for your cash, since banks can be insured by the Federal Deposit Insurance Corp. up to $250,000 per depositor, per insured institution, per ownership category.
Banking regulation has changed over the last 100 years to provide more protection to consumers. You can keep money in a bank account during a recession and it will be safe through FDIC and NCUA deposit insurance. Up to $250,000 is secure in individual bank accounts and $500,000 is safe in joint bank accounts.
FDIC Insurance
Most deposits in banks are insured dollar-for-dollar by the Federal Deposit Insurance Corp. This insurance covers your principal and any interest you're owed through the date of your bank's default up to $250,000 in combined total balances.
If your bank fails, up to $250,000 of deposited money (per person, per account ownership type) is protected by the FDIC. When banks fail, the most common outcome is that another bank takes over the assets and your accounts are simply transferred over. If not, the FDIC will pay you out.
There is a systemic risk of large-scale bank failures in the U.S. in 2024 due to charge-offs and write-downs emanating from the commercial real estate sector. Bank regulators have been vocal about their concerns that the too-big-too-fail banks would have sufficient capital to cover losses and a recession.
Treasury Bonds
Investors often gravitate toward Treasurys as a safe haven during recessions, as these are considered risk-free instruments.
If you keep more than $250,000 in your savings account, any money over that amount won't be covered in the event that the bank fails. The amount in excess of $250,000 could be lost. The recommended amount of cash to keep in savings for emergencies is three to six months' worth of living expenses.
The government can seize money from your checking account only in specific circ*mstances and with due process. The most common reason for the government to seize funds from your account is to collect unpaid taxes, such as federal taxes, state taxes, or child support payments.
Can a bank refuse to give me my money?
Yes. Your bank may hold the funds according to its funds availability policy. Or it may have placed an exception hold on the deposit.
Overall, Bank of America appears to be in a relatively healthy financial position and is not currently in imminent danger of collapse.
Bank of America is just one place below JPMorgan Chase on both the 2023 G-SIBs list and the Federal Reserve's list of the largest U.S. banks, which is why it was chosen in our research as one of the safest banks.
- JP Morgan Private Bank. “J.P. Morgan Private Bank is known for its investment services, which makes them a great option for those with millionaire status,” Kullberg said. ...
- Bank of America Private Bank. ...
- Citi Private Bank. ...
- Chase Private Client.
In the US, the general rule is that nobody, including the government, can search your financial records without your consent or a law authorizing the search. By the Fourth Amendment, such a law must be reasonable or it's unconstitutional.
Among the safest US banks, according to Global Finance's November 2022 rankings, are AgriBank, US Bank, CoBank, AgFirst Bank, and Farm Credit Bank of Texas, primarily for those in the agricultural sector.
Instead, the money's coming from the Deposit Insurance Fund, which is part of the Federal Deposit Insurance Corporation, or FDIC. Any bank insured by the FDIC has to pay quarterly premiums to the agency.
By law, after insured depositors are paid, uninsured depositors are paid next, followed by general creditors and then stockholders. In most cases, general creditors and stockholders realize little or no recovery.
Experts told us that credit unions do fail, like banks (which are also generally safe), but rarely. And deposits up to $250,000 at federally insured credit unions are guaranteed, just as they are at banks.
- First Republic Bank (FRC) . Above average liquidity risk and high capital risk.
- Huntington Bancshares (HBAN) . Above average capital risk.
- KeyCorp (KEY) . Above average capital risk.
- Comerica (CMA) . ...
- Truist Financial (TFC) . ...
- Cullen/Frost Bankers (CFR) . ...
- Zions Bancorporation (ZION) .
Which banks are going under?
Bank Name | Press Release | Closing Date |
---|---|---|
November Back to Top | ||
First Republic Bank, San Francisco, CA | PR-034-2023 | May 1, 2023 |
March Back to Top | ||
Signature Bank, New York, NY | PR-021-2023 PR-018-2023 | March 12, 2023 |
- Wells Fargo. BBB customer review rating: 1.06/5. ...
- Credit One. BBB customer review rating: 1.11/5. ...
- Bank of America. BBB customer review rating: 1.06/5. ...
- Chase Bank. BBB customer review rating: 1.1 / 5. ...
- US Bank. BBB customer review rating: 1.1 / 5.
During an economic downturn, it's crucial to control your spending. Try to avoid taking on new debt you don't need, like a house or car. Look critically at smaller expenses, too — there's no reason to keep paying for things you don't use.
If you are comfortable with your financial situation, have job stability, and have the cash reserves, big ticket purchases may still be achievable for you. But if you are feeling financially vulnerable to the possibility of an economic downturn, it is worth it to keep more cash on hand.
For investors, “cash is king during a recession” sums up the advantages of keeping liquid assets on hand when the economy turns south. From weathering rough markets to going all-in on discounted investments, investors can leverage cash to improve their financial positions.
References
- https://www.globalpolicyjournal.com/blog/24/03/2023/three-banks-have-now-collapsed-progressive-economist-explains-why
- https://www.newscentermaine.com/article/news/nation-world/is-my-money-safe-what-you-need-to-know-about-bank-failures-signature-bank/507-eaf04a0f-b559-4422-af00-74e7f5c53514
- https://www.businessinsider.com/personal-finance/is-money-safe-in-bank-during-recession
- https://www.nerdwallet.com/article/banking/how-much-money-in-checking-and-savings
- https://www.fdic.gov/consumers/banking/facts/payment.html
- https://smartasset.com/financial-advisor/where-do-millionaires-keep-their-money
- https://www.fdic.gov/resources/deposit-insurance/
- https://apnews.com/article/business-financial-services-signature-bank-6aa3564a8acda9098929abe4741fcbfd
- https://investorplace.com/2023/03/7-bank-stocks-that-are-the-least-likely-to-fail/
- https://www.americanbullion.com/can-banks-seize-your-money/
- https://www.sofi.com/learn/content/can-a-certificate-of-deposit-cd-lose-value/
- https://www.barrons.com/articles/small-community-banks-are-teetering-expect-more-failures-a3de6f78
- https://www.forbes.com/advisor/banking/if-a-bank-closes-what-happens-to-my-money/
- https://www.helpwithmybank.gov/help-topics/bank-accounts/funds-availability/index-funds-availability.html
- https://safehavenvaults.com/how-to-protect-wealth-in-a-depression/
- https://www.marketplace.org/2023/06/02/just-how-safe-are-credit-unions/
- https://www.nerdwallet.com/article/banking/is-my-money-safe-in-a-bank
- https://www.investopedia.com/deposit-insurance-keeps-bank-accounts-safe-even-if-its-funding-runs-dry-7496229
- https://www.fscs.org.uk/what-we-cover/banks-building-societies/
- https://coincodex.com/article/33788/worst-banks-in-america/
- https://www.fdic.gov/resources/resolutions/bank-failures/in-brief/bfb2024.html
- https://finance.yahoo.com/news/4-most-popular-banks-millionaires-150054420.html
- https://www.businessinsider.com/personal-finance/recession-things-not-to-buy-2022-12
- https://finance.yahoo.com/news/money-safe-bank-during-depression-120000038.html
- https://www.wellsfargo.com/financial-education/basic-finances/manage-money/options/fdic/
- https://www.ssa.gov/history/bank.html
- https://www.forbes.com/advisor/banking/safest-banks-in-the-us/
- https://www.macu.com/must-reads/tips/prepare-for-a-possible-future-financial-crisis-fined
- https://www.fdic.gov/resources/resolutions/bank-failures/failed-bank-list/
- https://www.news18.com/business/are-these-3-indian-banks-too-big-to-fail-read-to-know-more-7326211.html
- https://money.usnews.com/money/personal-finance/family-finance/articles/how-you-can-protect-your-money-in-the-wake-of-banking-collapses
- https://www.investopedia.com/financial-edge/0812/5-places-to-keep-your-money-when-you-dont-trust-the-banks.aspx
- https://smartasset.com/personal-finance/is-my-money-safe-in-the-bank-during-a-depression
- https://www.quora.com/If-banks-only-insure-up-to-250-000-where-do-rich-people-keep-their-money
- https://www.businessinsider.com/personal-finance/recession-save-more-cash-strategies-2022-12
- https://www.bankrate.com/banking/list-of-failed-banks/
- https://www.marketplace.org/2023/03/14/whos-responsible-for-paying-the-failed-banks-depositors/
- https://www.suffolkbuildingsociety.co.uk/blog/difference-between-banks-and-building-societies/
- https://www.forbes.com/advisor/banking/is-my-money-safe-in-the-bank/
- https://www.thepennyhoarder.com/bank-accounts/worst-banks/
- https://www.shopify.com/blog/how-to-make-money-in-a-recession
- https://money.usnews.com/investing/articles/best-investments-during-a-recession
- https://www.visualcapitalist.com/visualizing-the-investments-of-the-ultra-wealthy/
- https://time.com/personal-finance/article/how-much-cash-to-keep-in-checking-account/
- https://www.usnews.com/banking/articles/is-my-money-safe-at-the-bank
- https://www.1edcu.org/are-credit-unions-safer-than-banks-in-a-collapse/
- https://www.fool.com/the-ascent/banks/credit-union-vs-bank/
- https://www.noradarealestate.com/blog/is-bank-of-america-in-trouble/
- https://www.fdic.gov/consumers/banking/facts/priority.html
- https://www.bankrate.com/loans/personal-loans/what-happens-to-your-loans-when-a-lender-goes-bankrupt/
- https://www.globalcitizensolutions.com/safest-banks-us/
- https://smartasset.com/investing/5-things-to-invest-in-when-a-recession-hits
- https://www.cnet.com/personal-finance/banking/advice/what-happens-to-my-money-if-my-bank-closes-down/
- https://www.bankrate.com/banking/what-happens-when-a-bank-fails/
- https://www.investopedia.com/articles/pf/11/prepare-for-a-financial-crisis.asp
- https://www.cnn.com/2023/03/13/business/svb-fallout-consumer/index.html
- https://www.forbes.com/advisor/banking/atm-withdrawal-limits/
- https://www.fool.com/the-ascent/banks/where-put-money-recession/
- https://finance.yahoo.com/news/where-millionaires-keep-money-070638027.html
- https://www.kiplinger.com/personal-finance/how-to-protect-cash-and-investments-in-a-banking-crisis
- https://www.fool.com/the-ascent/banks/articles/heres-what-happens-when-you-withdraw-a-lot-of-money-from-your-bank-account/
- https://finance.yahoo.com/news/7-banks-dump-now-bust-234758659.html
- https://www.cnbc.com/2023/07/03/as-banks-fail-and-yields-stagnate-safe-places-for-investors-cash.html
- https://www.capitalone.com/bank/fdic/
- https://www.bankrate.com/banking/how-much-cash-should-you-keep-at-home/
- https://www.cnbc.com/select/top-reason-americans-withdraw-from-savings/
- https://quickbooks.intuit.com/r/banking/how-to-tell-if-a-bank-is-healthy/
- https://www.thestreet.com/personal-finance/banks-most-at-risk-morningstar
- https://www.nolo.com/legal-encyclopedia/financial-institution-fails-acquired-29945.html
- https://www.thetaxdefenders.com/can-the-irs-take-money-from-my-bank-account-without-notice/
- https://www.fitchratings.com/research/banks/fitch-affirms-capital-one-at-a-f1-outlook-stable-21-02-2024
- https://www.consumerfinance.gov/ask-cfpb/how-can-i-be-sure-my-money-is-safe-in-my-bank-account-en-1005/
- https://www.forbes.com/sites/qai/2022/08/24/is-it-true-that-cash-is-king-during-a-recession/
- https://www.investopedia.com/what-happens-if-my-bank-fails-7378029
- https://www.usnews.com/banking/articles/credit-union-vs-a-bank
- https://www.quora.com/Can-the-government-see-how-much-money-is-in-your-bank-account
- https://www.fool.com/the-ascent/banks/articles/over-1-trillion-has-left-traditional-banks-heres-whos-pulling-their-money/
- https://www.noradarealestate.com/blog/which-banks-are-in-danger-of-failing/
- https://www.fdic.gov/resources/resolutions/bank-failures/in-brief/bfb2023.html
- https://www.creditdonkey.com/safest-banks-in-the-us.html