Here's What Happens When You Have More Than $250,000 in Savings (2024)

A string of recent bank failures has left many people wondering if their savings are truly safe. And that's understandable. But one thing you need to know is that if your bank is FDIC-insured, there's generally nothing to worry about.

The purpose of FDIC insurance is to protect consumers in case their bank goes under. In that situation, the FDIC steps in and makes savers whole.

The problem, though, is that FDIC insurance only protects up to $250,000 per depositor, per bank. So if you have more than $250,000 in savings, and all of your money is at the same bank, it means you could be at risk of losing some of your money in the event of a bank failure.

You may want to spread your money around

Given that 67% of Americans don't have enough money in savings to cover an unplanned $400 expense, as per a recent SecureSave survey, for many people, the issue of having more than $250,000 in savings is just plain nonexistent. And even among people who have a lot of assets, the reality is that $250,000 in savings is a lot. Generally, someone with that much cash would be advised to put some of it into a brokerage account to invest.

But let's say you're stashing a lot of money away in the bank temporarily because it's earmarked for a specific goal, like buying a home. Maybe you're looking to buy in an area where a starter home costs $1.5 million, and you want to put down $300,000 so you're making a 20% down payment. In that sort of scenario, you might have more than $250,000 sitting in savings.

If that's the case, and you have your money at an FDIC-insured bank, the first $250,000 is protected. The rest isn't. So in that situation, a smart thing to do would be to move your remaining funds into a separate bank that's FDIC-insured.

The nice thing about that $250,000 FDIC insurance limit is that it renews per depositor once you go over to a new bank. It's not like you, as an individual depositor, are limited to $250,000 worth of FDIC protection all in.

A joint account gives you more protection

Money you have at a single bank beyond $250,000 isn't protected -- unless you have a joint holder on your account. With a joint account, you get $500,000 of FDIC insurance at the same bank since that $250,000 limit is per person. So if you have more than $250,000 in savings but under $500,000, and there are two names on your account, you should be protected in full.

Even though bank failures have been in the news quite a bit this year, thankfully, they're a pretty rare occurrence. But still, it's important to make sure your money is protected. If you have more than $250,000 and no one to share an account with, then it's a good idea to keep your money in however many banks it takes to make sure that all of your cash is insured.

These savings accounts are FDIC insured and could earn you 11x your bank

Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts could earn you 11x the national average savings account rate. Click here to uncover the best-in-class accounts that landed a spot on our short list of the best savings accounts for 2024.

Here's What Happens When You Have More Than $250,000 in Savings (2024)

FAQs

Here's What Happens When You Have More Than $250,000 in Savings? ›

Money you have at a single bank beyond $250,000 isn't protected -- unless you have a joint holder on your account. With a joint account, you get $500,000 of FDIC insurance at the same bank since that $250,000 limit is per person.

What happens if you have more than 250k in a savings account? ›

If your deposits exceed the $250,000 FDIC insurance limit, talk to your bank about the insurance status of your deposits and your options for insuring all of your savings in-house.

What is the 250k bank rule? ›

The standard maximum deposit insurance amount is $250,000 per depositor, per insured bank, for each account ownership category. The FDIC insures deposits that a person holds in one insured bank separately from any deposits that the person owns in another separately chartered insured bank.

How many people have over 250k in bank? ›

Of all the financial institutions reporting, including commercial banks and federal savings banks, there are approximately 860 million deposit accounts (not including retirement accounts). But fewer than one percent–just 0.83 percent–of these accounts have more than $250,000.

Where do millionaires keep their money if banks only insure $250k? ›

Millionaires can insure their money by depositing funds in FDIC-insured accounts, NCUA-insured accounts, through IntraFi Network Deposits, or through cash management accounts. They may also allocate some of their cash to low-risk investments, such as Treasury securities or government bonds.

Should you put more than 250k in a CD? ›

However, federally insured banks and credit unions only insure up to $250,000 per depositor per account ownership category. If you put more than this amount in a single CD, some of your money will be at risk. You can still safely invest more than $250,000 in CDs by opening accounts at multiple financial institutions.

How do millionaires protect their money in banks? ›

Millionaires don't worry about FDIC insurance. Their money is held in their name and not the name of the custodial private bank. Other millionaires have safe deposit boxes full of cash denominated in many different currencies.

How much money is too much to keep in one bank? ›

How much is too much savings? Keeping too much of your money in savings could mean missing out on the chance to earn higher returns elsewhere. It's also important to keep FDIC limits in mind. Anything over $250,000 in savings may not be protected in the rare event that your bank fails.

How much money can you put in the bank without getting in trouble? ›

Banks must report cash deposits of more than $10,000 to the federal government. The deposit-reporting requirement is designed to combat money laundering and terrorism.

How much money can you put in the bank without being suspicious? ›

When Does a Bank Have to Report Your Deposit? Banks report individuals who deposit $10,000 or more in cash. The IRS typically shares suspicious deposit or withdrawal activity with local and state authorities, Castaneda says.

What percent of Americans have $250000? ›

It may be assessed through either income or wealth. In absolute terms, affluence is a relatively widespread phenomenon in the United States, with over 30% of households having an income exceeding $100,000 per year and over 30% of households having a net worth exceeding $250,000, as of 2019.

Can the government see how much money is in your bank account? ›

The IRS probably already knows about many of your financial accounts, and the IRS can get information on how much is there. But, in reality, the IRS rarely digs deeper into your bank and financial accounts unless you're being audited or the IRS is collecting back taxes from you.

How do rich people get around FDIC limits? ›

Millionaires don't worry about FDIC insurance. Their money is held in their name and not the name of the custodial private bank. Other millionaires have safe deposit boxes full of cash denominated in many different currencies.

What car does a rich man drive? ›

Common Types of Cars Driven by the Wealthy: Luxury Brands: Think Mercedes-Benz, BMW, Audi, and Lexus. These brands are known for combining luxury with performance. They're often sleek, well-designed, and come with a host of high-end features.

What is the maximum amount you can keep in a savings bank account? ›

How Much Money Can You Keep in Savings Account? There is no limit on how much money you can keep in a savings bank account. However, banks have a minimum balance requirement that needs to be maintained in your savings bank account. If you fail to do so, you need to pay a penalty.

How much money is too much to keep in your savings account? ›

FDIC and NCUA insurance limits

This insurance protects your money if the financial institution you bank with goes out of business or otherwise can't afford to let you withdraw your money. So, regardless of any other factors, you generally shouldn't keep more than $250,000 in any insured deposit account.

What is the maximum amount you can have in a savings account? ›

There is no ceiling on maximum balance in Savings Bank account, except for Minors account and BSBDA-Small Account.

References

Top Articles
Latest Posts
Article information

Author: Moshe Kshlerin

Last Updated:

Views: 5579

Rating: 4.7 / 5 (57 voted)

Reviews: 80% of readers found this page helpful

Author information

Name: Moshe Kshlerin

Birthday: 1994-01-25

Address: Suite 609 315 Lupita Unions, Ronnieburgh, MI 62697

Phone: +2424755286529

Job: District Education Designer

Hobby: Yoga, Gunsmithing, Singing, 3D printing, Nordic skating, Soapmaking, Juggling

Introduction: My name is Moshe Kshlerin, I am a gleaming, attractive, outstanding, pleasant, delightful, outstanding, famous person who loves writing and wants to share my knowledge and understanding with you.