Is it safe to leave my money in the bank during the recession resulting from COVID-19?

It is the customers who can put their own money at risk

The current recession in the United States caused by COVID-19 has many people worried about their jobs, their income and even their bank accounts. The reality is that there is nothing to worry about as your money is absolutely safe in a bank.

Not even the coronavirus pandemic could affect your bank accounts since they are insured by the Federal Deposit Insurance Corporation ( FDIC ). The FDIC insures deposits up to $250,000 in the event of a run or bank failure. If you have more than that amount, it would be advisable to have several accounts so that all your money is protected.

Having your cash in a bank account is safer than leaving it at home . Whether you carry it or store it under the mattress, you are not exempt from theft or fire that could leave you completely broke. Not to mention that your money does not generate anything being with you, while you could earn interest on your cash, depending on the type of account you have.

However, if collective fear is stronger than reason, then the bank could be at risk from the bank run and run out of funds.

A bank run is when a large number of customers believe that their bank is going to run out of money and then there are panic withdrawals. This phenomenon is a vicious circle , just as it happened with toilet paper in the first days of March, since it causes a risk-free circumstance to become a self-fulfilling prophecy, because precisely those withdrawals leave the banks without reserves.

According to NerdWallet, bank runs were a serious problem during the Great Depression and many people lost their savings due to bank failures. Because of this, the Federal Deposit Insurance Corp. was formed to ensure that this situation is not repeated and that no bank customer loses their insured money.

That’s why, with or without COVID-19, when you have a bank account, trust it and only take out the money you are going to use and never make panic withdrawals. Better share this post so that more people know that their cash will be safe as long as they are calm and trust their banking institution.