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Managing your checking and savings accounts at one bank has its advantages. For one, instant transfers can make moving money a breeze. Plus, banks may offer perks like a higher annual percentage yield (APY) when you have high combined account balances.
Despite those conveniences, you might wonder if it's wise to stash all your money in one place. After all, what would happen if the bank were to fail? Typically, keeping all your accounts with one bank is safe because banks usually have insurance protections to safeguard your money. But you may want to weigh your options if you have a lot of assets or you're worried about fraud.
How Are Bank Accounts Protected?
Bank accounts are usually protected by the Federal Deposit Insurance Corporation (FDIC), and most accounts at credit unions are protected by the National Credit Union Administration (NCUA). Both FDIC and NCUA insurance guarantees up to $250,000 per depositor, per ownership category if a financial institution fails. A bank failure is when an institution can no longer keep up with its obligations to depositors, according to the FDIC.
While bank failure isn't common, it happens. Between 2001 and 2022, 561 banks failed, and four banks failed at the start of the pandemic in 2020. If your bank were to go bust, the FDIC might either set up a new bank account for you at another financial institution or send you a check for your insured account balance. It's important to note that not all financial institutions have deposit insurance, so you should double check what guarantees are protecting your money before opening an account.
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Are All My Bank Accounts Insured?
Deposit accounts at FDIC- or NCUA-insured institutions are all protected, but you're limited to $250,000 in coverage for each account category. For example, the "single account" category includes both checking and savings accounts. So, if your bank or credit union shuts down, you could recover up to a combined $250,000 from your checking and savings accounts.
Joint accounts are a separate category where up to $250,000 is guaranteed for each depositor. That means you and your partner could be protected for up to $250,000 each ($500,000 in total) for cash stashed away in an account you jointly own.
Here are coverage limits for individual, joint and retirement accounts:
|Ownership category||Account examples||Insurance coverage|
|Single accounts||Savings accounts, checking accounts, money market accounts and certificates of deposit (CD) accounts owned by one person||Up to $250,000 per owner|
|Joint accounts||Deposit accounts owned by more than one person||Up to $250,000 per co-owner|
|Certain retirement accounts||Traditional IRAs, Roth IRAs, SEP IRAs, SIMPLE IRAs and self-directed 401(k) plans||Up to $250,000 per owner|
Credit cards you have at a bank are also protected thanks to the Fair Credit Billing Act (FCBA), which limits your credit card liability to $50 if there are unauthorized charges on your account. However, banks and credit card companies often offer zero-liability protection that makes you responsible for none of the unauthorized charges that hit your account.
What Are the Risks of Keeping All Your Accounts With One Bank?
If you have account balances that exceed the deposit coverage category limit at your bank, one risk is that some of your money may not be covered by insurance.
For example, if you have $300,000 in retirement savings, $250,000 would be guaranteed at your bank while $50,000 would not. In this scenario, moving $50,000 of your nest egg to another financial institution could be the safer strategy since FDIC insurance covers up to $250,000 for the retirement category per financial institution.
Account security is another factor to consider when your money is all in one place. If you lose your debit card or someone gets into your online account, they could get access to all of your money. On the other hand, splitting up money across accounts at different banks puts your eggs in many baskets. This way, you could have other cash to fall back on until money is replaced after fraudulent transactions.
While there is a chance your bank could go belly up, or you could be a victim of bank fraud, keeping your money at a bank is usually still safer than storing cash at home. If money is stolen from your house, it might never be replaced. Meanwhile, your responsibility for unauthorized bank transactions could be limited if you report them right away, and deposit insurance protection could replace your money if your bank runs out of cash.
Explore Other Banking Options
If you have large balances at a bank, it may be worth exploring whether shifting funds to other banks could provide you with more deposit insurance coverage. When shopping for new accounts, compare fees, banking perks and APYs to find a good second home for your money. Looking at the insurance and security features a bank or credit union has before opening an account can also give you extra peace of mind that your money is in the right hands.