Q. How safe is the money I have in the bank? Would I be better off taking it out and hiding it under a mattress?
No way, say experts. That's a bad idea. Don't do it.
The United States – and much of the world – is indeed in a financial crisis and things could – and probably will – get worse before they get better.
But the United States also stands behind money deposited with banks that are members of the Federal Deposit Insurance Corp.
If something catastrophic happens to your bank and it finds itself broke or no longer in business, the FDIC will step in and make your deposits whole again (within limits).
But if something catastrophic happened to the cash you stashed – the house burned down, someone stole it, or you forgot where you hid it – you'd be out of luck.
Q. They'll insure every account I have at the bank?
They'll insure up to $250,000 of deposits per depositor per banking institution and up to another $250,000 for depositors who have self-directed IRAs at that same banking institution.
Need that in plainer English? The FDIC insures the money in checking, savings, trust, CD and money-market deposit accounts at its member banks. If you have money plopped in more than one of these accounts at the same bank, you're fine as long as the total amount doesn't exceed $250,000. That's a new maximum limit, up from $100,000.
And you may be fine if you have more money than that deposited with the bank depending on how the account ownership is structured. For example, if you're married, your spouse is also eligible for up to $250,000 of coverage on accounts that he (or she) has.
If you have accounts at a different banking institution, they'd be eligible for the full amount of insurance, too.
Q. Are there accounts they won't insure?
The FDIC doesn't insure nondeposit investments made through your bank, such as mutual funds, annuities, life insurance policies and stocks and bonds. The agency also doesn't insure contents of safety-deposit boxes.
Q: If the FDIC is so great, why did so many people lose money when banks failed in the Great Depression?
Because the FDIC didn't exist then. The agency was created during the Depression to help restore the public's confidence in the banking system.
Q: What if my bank is being sold? Should I consider moving my accounts?
If you want to. Your accounts wouldn't lose their FDIC insurance in the sale. So you should base your decision on what makes the most financial sense – are the fees and rates better or worse? Will minimums change? Does convenience factor in?
Q: How healthy is my bank?
You can see how healthy your bank is judged to be by any of a number of companies that rate banks and credit unions based on factors such as capital, asset quality, management, earnings, liquidity and sensitivity to market risk.
The FDIC also rates banks and thrifts but doesn't release that information to the public.
But companies such as Bankrate Inc. and BauerFinancial Inc. do. You can find the companies' Web sites through Internet searches.
Q: My accounts are at a credit union. Should I worry?
No. The National Credit Union Share Insurance Fund, which is run by the National Credit Union Administration, insures share accounts at all federally chartered credit unions and most state-chartered credit unions up to the same amounts as with the FDIC and its member banks.