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Yahoo
4 days ago
- Business
- Yahoo
Is your money safe in a bank during a recession?
As scary as they can be, recessions are normal — and temporary. But that doesn't make them any less painful. With the possibility of a recession dominating headlines in recent months, it's no surprise if you're concerned about the security of your money. You may even wonder if your money is safe in a bank during a recession. Two pieces of good news may help calm your fears: First, according to JPMorgan Research, the likelihood of a recession has dropped from 60% to 40% in recent weeks. Second, even if a recession does happen, your money is safe in a bank. Continue reading to learn how banks protect your cash, what happens when they fail, and how you can keep your money safe during a recession. Banks are generally safe at any time, including during a recession. In 1933, following the Great Depression, the Federal Deposit Insurance Corporation (FDIC) was created to promote consumer trust in banks. The FDIC protects insured bank deposits of up to $250,000 per customer, per insured bank, per ownership category, in case of bank failure. FDIC insurance doesn't apply to all account types; it only covers certain deposit accounts, such as savings accounts, checking accounts, money market accounts, and certificates of deposit (CDs). Money invested in stocks, bonds, mutual funds, and other investments isn't covered. Bank failures are unlikely, but they do happen on occasion, and especially during a recession. While there has only been one bank failure in 2025, there were 157 in a single year following the Great Recession. But even when banks fail, FDIC insurance protects bank customers in one of two ways: The FDIC may open a new account for you at an insured bank with a balance equal to your insured balance at the failed bank. The FDIC may send you a check in the amount of your insured balance at the failed bank. According to the FDIC's website, it has historically paid customers within a few days of failed bank closures. And since the creation of the FDIC, no depositor has ever lost insured funds. Credit unions and banks are both safe during a recession, provided they're both federally insured. Like banks, credit unions offer insurance on deposits of up to $250,000. Though FDIC insurance doesn't apply to credit union deposits, credit unions are insured by the National Credit Union Administration (NCUA), which provides similar coverage. While banks and credit unions provide the same amount of financial protection during a recession, credit unions have characteristics that may make them feel safer. For example: Credit unions are member-owned. Unlike banks, credit unions are nonprofit organizations and don't have to cater to shareholders. This generally means they put members' needs first and offer highly personalized customer service, which can provide some peace of mind during financially unstable times. Credit unions tend to have fewer fees, more affordable loans, and higher savings rates. Because credit unions are nonprofit entities, they can pass profits on to members in the form of lower fees and higher savings rates. These extra savings can go a long way during a recession, when members may be looking to cut costs wherever they can. Credit unions take less risk compared to banks. Because banks operate for a profit, they're generally willing to take on more risk in the pursuit of bigger returns. For example, the majority of subprime mortgages in 2006 were issued by banks, not credit unions. Credit unions, meanwhile, are more risk-averse, which can provide a sense of stability for their members. You can keep your money safe during a recession by keeping it in the right place. Here are some tips to make sure your cash is secure if and when a recession hits: Make sure you bank with insured institutions. FDIC or NCUA insurance protects your deposits as long as your bank or credit union is backed by one of these organizations. To confirm your bank is FDIC-insured, use the FDIC's BankFind Suite tool. To check a credit union's NCUA status, use the NCUA's Credit Union Locator tool. Get extra FDIC coverage. If you have a lot of money saved, $250,000 worth of insurance may not be enough. Luckily, some banks allow you to insure deposits beyond the standard $250,000 by using something called reciprocal deposits. This system spreads your money between multiple partner banks, each of which can insure up to the standard limit. Alternatively, you can insure funds beyond the $250,000 maximum simply by opening accounts at multiple banks. Build an emergency fund. An emergency fund is always important, but it's particularly crucial during a recession. Having cash on hand in a safe, high-interest account like a high-yield savings account gives you extra comfort and protection if an emergency does happen. Read more: Recession-proof your money: How to protect your savings, investments, mortgage, and more Yes, keeping your money in the bank during a recession is generally a good idea. You can also keep your money in a credit union. As long as your bank or credit union is insured by the FDIC or NCUA, your deposits will be safe up to federal limits. Both banks and credit unions are safe places to keep your money during a recession. Banks are insured by the FDIC, and credit unions are insured by the NCUA. Both types of financial institutions insure up to $250,000 per depositor, per account category. Both banks and credit unions are safer than keeping physical cash, which can get lost, stolen, or damaged. Generally, the government can't take money from your bank account in a crisis. However, it may be able to garnish wages and seize your tax refund if you owe outstanding debt, such as federal student loans.
Yahoo
03-06-2025
- Business
- Yahoo
4 Money Management Benefits of Keeping Your Bank Accounts Organized
A record 96% of households in the United States have a bank account, according to the Federal Deposit Insurance Corporation. Bank accounts are a useful tool for managing money effectively, and there are many different ways people can use bank accounts to get organized, track their expenses and improve their financial lives. Simon Blanchard, an associate professor at Georgetown's McDonough School of Business, conducted a survey on financial mindfulness, which found that practicing financial mindfulness can lead to better financial outcomes. Read Next: Check Out: Keeping an organized system is one way to effectively manage money and achieve financial mindfulness. Here are some key benefits of keeping your bank accounts organized. Also see how many bank accounts you should have. The unknown is incredibly stressful for people. Knowing what's in your bank account, when you get paid and when your bills are due can reduce financial stress. Even if you don't have a significant amount in your accounts, being aware and mindful of where you stand is a positive first step in money management. Explore More: When your bank accounts are organized, it's much easier to track your expenses. You can look to see that your bills have been paid and that your paycheck arrived on time. Tracking your expenses takes only a few minutes a day and can help you feel on top of your finances. When you're organized with your finances, it's much easier to catch fraud. You can see if someone used your bank information without your authorization. You can also see if there are unknown charges on your accounts and report them to your bank immediately. Organizing your accounts and managing them in a specific way can help you prioritize and reach your financial goals. For example, one common money management system is to keep a savings account for each financial goal you have, whether that's buying a new car or taking your family on a vacation. Here are a few examples of money management systems you can try using bank accounts. Sahirenys Pierce, a financial planner and the creator of Poised Finance & Lifestyle, created a money management method called the High 5 Banking Method. With this method, Pierce advised people to create five bank accounts: two checking accounts and three savings accounts. Use one checking account only for bills and the other for lifestyle purchases, like entertainment. Your savings accounts should include an emergency fund, a short-term goals savings account and a long-term goals savings account. Many banks now offer goal-based savings accounts. This is where you can edit your bank account's name to reflect your savings goals. This works especially well for savings goals that you want to reach in five years or less. For goals that are beyond five years, it may be wise to consider investing. Many experts share their money management systems, but they often center around checking accounts and savings accounts. It's also important to incorporate investing accounts into your money management strategy. In addition to your employer-sponsored retirement accounts, you can open your own investment accounts in order to reach other goals you want to achieve before retirement age. More From GOBankingRates 25 Places To Buy a Home If You Want It To Gain Value Clever Ways To Save Money That Actually Work in 2025 This article originally appeared on 4 Money Management Benefits of Keeping Your Bank Accounts Organized Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Reuters
28-05-2025
- Business
- Reuters
U.S. banks see profits climb in first quarter: FDIC
WASHINGTON, May 28 (Reuters) - The U.S. banking industry reported $70.6 billion in profits in the first quarter of 2025, a jump of 5.8% from the previous quarter, the Federal Deposit Insurance Corporation reported Wednesday. The regulator said profit growth was primarily due to climbing noninterest income at banks, which was up 7% on the quarter. "With strong capital and liquidity levels to support lending and protect against potential losses, the banking industry continued to support the country's needs for financial services while navigating the challenges presented by economic uncertainty, elevated inflation and interest rates, tighter credit, and elevated unrealized losses," said FDIC Acting Chairman Travis Hill in a statement. However, banks also reported slight growth in provision expenses against potential loan losses. Those expenses were up 0.3% quarterly to $22.5 billion, and now stand 9.1% higher than a year ago. While bank asset quality remained generally favorable, with past-due loans relatively flat, the FDIC noted that banks are still grappling with struggles in commercial real estate, where overdue loans hit 1.49%, its highest level since 2014. Loan growth was also reported to be relatively slow, with balances climbing just 0.5% from the previous quarter. In terms of annual growth, banks are currently seeing just 3% growth, which is below the pre-pandemic average of 4.9%, the FDIC said.
Epoch Times
20-05-2025
- Business
- Epoch Times
The Best Places to Park Your Short-Term Investments
As you sift among the various options for your short-term investments, keep these key items on your dashboard: yield, guarantees, liquidity, and your individual situation. The short-term investments that promise the highest yields often come with at least some risk and/or constraints on your daily access to funds. It may be that you're just looking for the highest safe yield and don't care that much about liquidity. Or maybe having ready access to your funds is the name of the game. Also think through whether you value an ironclad guarantee or are willing to go without in exchange for a potentially higher yield. Some cash instruments are fully insured by the Federal Deposit Insurance Corporation (FDIC), while others are not. On the short list of FDIC-insured investments are checking and savings accounts, certificates of deposit (CDs), money market accounts (not to be confused with money market mutual funds), and online savings accounts. CDs will typically offer the most compelling yields of all cash instruments, and they're also FDIC-insured. Yet there are a couple of caveats. One is that minimum deposits for the highest-yielding CDs might be $25,000 or even higher. There's also a trade-off on the liquidity front: You'll usually pay a penalty if you need to crack into your holdings before the maturity date. The longer the term of the CD, the bigger the penalty for cashing out early. If you want daily liquidity, a decent yield, and FDIC protection, your best bet will tend to be a high-yield savings account through an online bank or a savings account through a credit union. The former offers FDIC protection, up to the limits, whereas credit union accounts are insured by another entity, the National Credit Union Administration. Related Stories 4/23/2025 4/14/2025 Money market mutual funds also offer daily liquidity and the convenience of having those funds live side by side with your long-term investments. But money market fund yields are still generally below those of online savings accounts today. Additionally, money market mutual funds aren't FDIC-insured, though in practice most funds have done an excellent job of maintaining stable net asset values. Don't confuse money market mutual funds with brokerage sweep accounts, though both are offered by investment providers. Interest rates on brokerage sweep accounts, which hold investors' cash that hasn't yet been invested, have ticked up a bit recently but are still well below other cash options. Stable-value funds are another example of an investment that offers an often-decent yield in exchange for not checking the liquidity and guarantee boxes. Stable-value funds are only accessible inside of company retirement plans. They invest in bonds, so they're not FDIC-insured; to protect investors' principal, they employ insurance wrappers to help maintain a stable net asset value. Just bear in mind that stable-value funds carry drawbacks. Because you can only own such a fund within a 401(k), you'll pay taxes and penalties to withdraw your money before retirement unless you meet certain criteria. So don't think of a stable-value fund as an emergency fund unless you're already retired or close to it. In contrast with the preceding investment types, I bonds are the only safe investment vehicles that guarantee investors will keep pace with inflation. I bonds are Treasury bonds that pay a fixed rate of interest as well as another layer of interest that varies with the current inflation rate, as measured by the Consumer Price Index. As attractive as that is, it comes with several limitations. If you redeem an I bond within five years of buying it, you'll forfeit three months' worth of interest. Purchase constraints are another drawback for large investors. By Christine Benz of Morningstar The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.
Finextra
19-05-2025
- Business
- Finextra
Standard Chartered appoints Jennifer Lassiter as head of digital assets
Standard Chartered today announces the appointment of Jennifer Lassiter as Head of Digital Assets, Europe and Americas, based in New York City. 0 Jennifer joined the Bank on 5 May 2025, reporting to Rene Michau, Global Head of Digital Assets. In her role, Jennifer will lead the Bank's strategic digital assets initiatives across Europe and the Americas, focusing on expanding digital asset capabilities, deepening partnerships across the ecosystem, and advancing the development of secure infrastructure to support future growth in the digital asset space. Rene Michau, Global Head of Digital Assets, said: 'Jennifer brings exceptional expertise in driving innovation and shaping digital finance policy across both public and private sectors. Her leadership will be instrumental in driving our efforts to bridge the world of financial services and the fast-evolving digital asset ecosystem.' Jennifer has over 20 years of industry experience. She joins from The Digital Dollar Project, where she worked closely with regulators, industry leaders, and multinational companies on fostering the ecosystem for central bank digital currencies (CBDCs), with an emphasis on governance strategy, operational efficiency, and innovation. Her background also includes being a founding member of the Federal Deposit Insurance Corporation's Innovation Lab, where she drove efforts to strengthen industry collaboration and champion responsible innovation in financial regulation, and spearheading technology initiatives at the Consumer Financial Protection Bureau, establishing her as a recognised leader in the financial innovation and regulatory strategy.
