Would you withdraw your money?

[M&M's Mommy]

News that banks go bankrupt one after another make my husband nervous. He wants to close our saving account at our bank and bring the little money we have there home. I don't wanna.. thinking that first of all, there are $100,000 FDC (sp?)warranty for each account in case the bank goes bankrupt, secondly, I think it's much safer to have money at the bank than at home, thirdly, money at bank yields interests while money at home does not.

Should I convince my husband that it's still safe to keep our money at the bank, or am I wrong?

What would you do?

[shepgirl]

Ffunny you should bring that up...I was just thinking about the same thing myself. I know they insure your money but if they go bankrupt where does the insurance money come from. I prefer not having it at home but I have 3 different accounts and I do worry about banks lately.
All in all I know it's safer in the bank, but the doubt is still there.

[Karen]

Absolutely don't withdraw your money. If you are worried, and have over $100,000 dollars in any single account, call your bank and ask what limit their FDIC insurance covers. If it is $100,000, consider opening another account somewhere else, and splitting the money.

The money will come from the Federal Deposit Insurance Company. All banks are required to have FDIC coverage.

Withdrawing all your money will do you no good, in that it will no longer earn interest, and will do the economy harm, as if too many people do it, it can snowball, and that's what sparked the Great Depression.

shepgirl, you are in Canada, so I do not know about your banking system.

[M&M's Mommy]

Oh, we have much less than $100,000 - that's why I don't worry too much.. but my husband's reason is that what if all the banks go bankrupt all at once, and the FDIC runs out of money to pay, plus there would be millions of people to pay.. what'll happen then?

I guess since we have so little, every dollar means so much to us now, and the thought of loosing them all is scary.

[Karen]

Tell him it is okay, but not to worry too much. THE FDIC was set up to prevent an event like the Great Depression from happening again. Here's a good page that should answer all your questions about the FDIC:

http://www.fdic.gov/deposit/index.html

[Catlady711]

Oh, we have much less than $100,000 - that's why I don't worry too much.. but my husband's reason is that what if all the banks go bankrupt all at once, and the FDIC runs out of money to pay, plus there would be millions of people to pay.. what'll happen then?

I guess since we have so little, every dollar means so much to us now, and the thought of loosing them all is scary.

Funny thing, I went through this EXACT same thing with my hubby about 10 years ago (granted economy was better then) trying to get him to open a savings acct and a measly Christmas Club acct. Hubby wanted to keep all his money in the mattress!

I finally made him an appt with the bank manager to sit down and have a good talk with them about how things really work now-a-days. He now has a savings acct, Christmas Club acct, and even a CD! He's quite happy he finally decided to listen and I make a POINT of showing him the statements every month of the interest earned PLUS add up the interest year to date so he knows his money is working for him.

[Medusa]

Karen has given you good advice. If others feel the same way as your husband, there could be a run on the bank and that would be disastrous. FDIC will cover you should the bank fail. Let your money earn interest. It isn't safe at home anyhow. My neighbor just told me this weekend that she keeps tons of cash in her house. I told her "You shouldn't be telling people that. You shouldn't even have told me that." If words gets out, she can be robbed and then they might hit the entire neighborhood. Things like that can snowball very quickly.

[shepgirl]

Much the same except for the insurance part in Canada. But that's why I have 3 seperate accounts, I'm greedy for higher interest rates and I only need a small one for paying bills and stuff. I would be too scared to take it out but I do worry with all the turmoil around us.

[kitten645]

I think one of the main reasons we are in the economic mess we are in is that people are ignorant of how finances work. Not the ONLY reason mind you. There are plenty of politicians, brokers and bankers to shoulder the blame as well. But many of these people facing foreclosure had no idea what they were getting into financially. Money is far too important to deal with blindly. Like most things in life, a financial education isn't for the rich/elite. Learn how things work and don't follow the crowd. Money is as personal as it gets. What works for one person might not for another. But only you can know what's right for you. If it seems like too good a deal (double your money in six months by buying a house ) It probably isn't a deal at all.

[zippy-kat]

No, I would not and I will not.

Don't forget that many places are insured not only by FDIC but also SIPC. FINRA has a good education material, for those interested.

[Laura's Babies]

What worries me is the 401K's... with the stock market and financial institutions so shakey....

I think right now my savings are safer than my 401K is...

[K9karen]

Nope. Of course I don't have that much but I still have accounts split. Your money is insured as everyone said, it's safer and you get some return on it.

My worry is my 401k's which I kept even after I stopped working, cause I surprisingly made great choices at the time and was doing OK. Now every statement has a loss. Yuk.

[smokey the elder]

Leave it be. They focus on the banks that are failing. I heard a stat that 98% of banks are solvent. A more useful metric would be, what percent of people's deposits are in solvent banks? I would hazard a guess that it's a pretty high number.

Banks, and other investing bodies who over-expose themselves to risk will run into problems. This has occurred as long as one person asked someone else to hold their money for them, and won't stop happening, I don't think.

[Pam]

I agree with the others. Leave it be. Should you have more than $100,000 you might want to spread it out among other banks just to be safe.

[lizbud]

Leave it be. They focus on the banks that are failing. I heard a stat that 98% of banks are solvent. A more useful metric would be, what percent of people's deposits are in solvent banks? I would hazard a guess that it's a pretty high number.

Banks, and other investing bodies who over-expose themselves to risk will run into problems. This has occurred as long as one person asked someone else to hold their money for them, and won't stop happening, I don't think.

I agree. If I had any money , I wouldn't change anything just yet. Let the market settle for awhile.