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.