![]() In a typical year, credit card fraud is the most significant form of identity theft consumers face. But the majority of those reports from Q1 involved new accounts opened by fraudsters, meaning there was no direct impact on funds already on deposit. In the first quarter of 2022, the Federal Trade Commission received 43,412 reports of identity theft involving bank fraud, up from 31,466 in the last quarter of 2021. And it’s somewhat concerning that identity theft involving bank fraud has ratcheted up in recent years. Identity Theft and Bank SafetyįDIC insurance doesn’t cover losses due to theft, including fraud and identity theft. government, which typically steps in if the FDIC is overwhelmed and provides the funds necessary to bail out banks. FDIC insurance is backed by the full faith and credit of the U.S. Consider that as of March 31, 2022, the FDIC bailout fund contained $123 billion, while the total deposits the FDIC insured amounted to nearly $10 trillion. That’s because its fund to cover deposits, which is generated from insurance premiums paid by banks, is far less than the sum of its actual deposits. However, the FDIC itself can run short if numerous banks fail at once, which happened during the last recession. Customers of the old bank may not even notice a change until their bank suddenly starts going by a new name. Ordinarily when a bank fails, the FDIC steps in to cover any losses and arrange for another institution to take over. Most failed in the Great Recession years of 20. During the past 20 years, 561 FDIC-insured banks have gone under. The good times may not last, particularly if recent recession predictions are correct. Still, with around 5,000 credit unions operating, that’s no cause for alarm. In 2021, nine institutions closed or were placed into conservatorship-the most in a while. But a typical year sees at least a handful of bank failures, so don’t think it’s impossible.įor credit unions, which are insured by the National Credit Union Administration (NCUA), recent years have been rockier. ![]() So far in 2022, the story has been the same. According to the Federal Deposit Insurance Corporation (FDIC), which insures depositors against losses in the event of a bank failure, there were no failures among the nearly 4,800 institutions it insured in 2021. Bank runs can lead to the collapse of a bank that can’t cover the requested withdrawals.īank runs are scary, but they rarely happen. Historically, however, there have been times when people have lost faith in a bank or the whole banking system, and they’ve lined up in droves to demand their money. As long as there isn’t a run on the bank, there won’t be any problems. Meanwhile, its 10% capital reserve supplies cash to people who close their accounts or make withdrawals. The bank takes deposits, makes loans and collects loan payments to replenish its coffers. That means 90% of the money your account statement says is at the bank is actually somewhere else, like with an auto dealership that sold a car to someone who borrowed funds from your bank. By law, banks must hang on to some money, but it’s not much.Ĭapital requirements vary by institution, but according to the Federal Reserve, it’s around 10% for many big banks. As soon as your bank receives a deposit, it gives that money to someone else in the form of a loan. To start with, understand that your money is not actually in the bank. ![]() Fortunately, there are things you can do to increase the security of the money you have in the bank. However, depending on several factors, including your balance and the type of account, your money might not be completely protected. Generally, money in the bank is safe-even in a recession or other tough economic times.
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