If you have more than $100,000, there is no reason to keep it all at one bank.
(There is actually one reason, but it’s not a good one. At most banks, the interest rate on jumbo CDs is a little larger than regular CDs but it requires that you open one with at least $100,000 – but that’s a bad reason.)
Here’s one horror story about a woman who kept more than $100,000 at Silver State Bank, the Nevada bank that recently went into FDIC conservatorship, and lost over $20,000 (~$20 million was uninsured in total).
The unfortunate part about this story is that CNN is playing to the crowd’s emotions (not surprisingly) by playing clips of her talking about her wanting to put her money in her mattress and how unfair it is that companies are being bailed out while she’s being screwed (and that last completely irrelevant bit about McCain’s connection to the bank, play up to election season!). It’s just adding fuel to the fire. Don’t be ridiculous though and don’t be stupid, don’t put your money in a mattress (because if you have fire, we will no doubt see you on a clip on CNN about it).
It’s unfortunate that they lost that money (even more unfortunate that her husband’s identity was stolen, because if it was a joint account then it would’ve had coverage up to $200,000) but those are the rules. Had it been before the FDIC was created, she would’ve lost more than $20k.
- Don’t put more than $100,000 in any one bank unless you’re certain FDIC coverage limits will have your back. There’s absolutely no good reason to.
- Keep up to date on the news about your bank because no bank is immune to this. Prior to the failure, customers withdrew $250 million in the two months before it failed – that’s information you probably want to be aware of.