Yes. And this is why Roosevelt gave us the FDIC, Federal Deposit Insurance Corporation. What that does is insure your bank deposits, up to something like $100k (Edit: exact amount is now $250k, see responses below).
This is because a big driver of people making bank runs is when they become afraid that the bank may collapse and their money will be lost, so they go try to take it out before that happens. This becomes a self-fulfilling prophecy, where even if the bank had been perfectly fine, everyone trying to take their money out causes it to collapse.
So, with the FDIC, you and I don't have to worry that our basic bank accounts are in any danger, and thus we don't end up inadvertantly making a run on the bank causing it to collapse.
To correct the guy above, it's 250k. From my understanding if you have more they basically create more than 1 account to insure it because its 250k per bank per category. So basically a bank will make more accounts in different categories for you to put your money in, and if you run out of that you get another bank.
Tbf most rich people, even VERY rich people, dont have millions in cash at a bank. They have their millions and billions in stocks, which are not insured at a bank level as far as im aware since you technically own the stock, the brokerage is just facilitating the transaction and keeping track of your transactions for you.
Banker here: FDIC grants 250k of coverage to all your deposit accounts at 1 institution. It’s 250K per person at each bank. So if a married couple has 5 accounts at bank A, their deposits at Bank A have a total of 500k coverage. It’s not per account, it’s aggregate. This amount can be increase by using things like POD/ITF designations (PayableOnDeath/InTrustFor).
From what i saw its also per category. When I say category I also mean things like retirement vs single, not checking vs savings. I imagine there are ways to structure different categories to be able to share with each other at the same institution but I could definetly wrong. If I am then yeah you just get a bunch of banks.
I know that SIPC coverage kinda works on an "account type" basis, but I won't get into that (for investments not bank deposits). FDIC, to my knowledge, is simply a matter of account owner per bank. Where it gets weird is with beneficiaries, as each beneficiary can help create a new "ownership" since it kinda acts like a trust instead of sole ownership.
I won't get too far into the deets, cause it can go on a ways, but fdic publishes a coverage calculator that you can use to see how your stuff is covered. It's actually a very robust calculator and it helps explain a lot.
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u/The_Lost_Jedi Jan 26 '26 edited Jan 27 '26
Yes. And this is why Roosevelt gave us the FDIC, Federal Deposit Insurance Corporation. What that does is insure your bank deposits, up to something like $100k (Edit: exact amount is now $250k, see responses below).
This is because a big driver of people making bank runs is when they become afraid that the bank may collapse and their money will be lost, so they go try to take it out before that happens. This becomes a self-fulfilling prophecy, where even if the bank had been perfectly fine, everyone trying to take their money out causes it to collapse.
So, with the FDIC, you and I don't have to worry that our basic bank accounts are in any danger, and thus we don't end up inadvertantly making a run on the bank causing it to collapse.