How Safe is Banking in the USA?

You may have heard some recent discussion about the United States banking system, bank collapses and the safety of your money.  With these stories dominating the news, you may also find yourself wondering, “Is my money safe in a US bank?”

Despite the recent news, yes, your money is very safe in American banks.  There are a few reasons why you can feel very confident keeping your money in a US bank:

Your Money is Insured
Customers of the US banking system are protected by the Federal Deposit Insurance Corporation, which you’ll probably hear referred to as the FDIC. The FDIC was created in 1933 to help protect money held in banks at the height of the Great Depression.

Since the FDIC was created, according to a CNBC news story from March 2023, no customer of an FDIC-insured bank has ever lost their funds due to a bank failure. Even if a bank is forced to close, you can rest assured that you will get your money back.

US Banks Don’t Just Disappear
You may have heard that two large banks in the USA recently failed, including the very large Silicon Valley Bank.  When a US bank goes out of business, though, it doesn’t simply cease to exist.  Instead, the capitalism persistent throughout the USA comes into play, and other financial institutions purchase the assets and accounts of the failed bank.

When Silicon Valley Bank collapsed in March 2023, its assets and customer base were acquired by a smaller bank, First Citizens, headquartered in North Carolina. According to a March 2023 article in the New York Times, all customer accounts at the former Silicon Valley Bank were successfully transferred to First Citizens Bank, and customers did not lose any of their deposited funds.

Bank Failures are not Common in the USA
If you’re wondering why the failure of a bank in the USA is big news, it’s because it doesn’t happen very often. In March 2023, USA Today reported fewer than 1% of FDIC-insured banks have failed in the last 10 years.

An American bank account is critical to successfully operating your business in the USA. Fortunately, you can be very confident that your funds are safe when you deposit them in a US bank.