When people in the U.S. put money in the bank, they know it’s safe. In fact, not a single U.S. person has lost a penny of insured bank deposits since 1933. That’s when the government put in safeguards following the worldwide economic downturn of the Great Depression.
Here are three ways Americans know their money is safe:
- Anyone opening a bank account in the U.S. can look for a logo that says “FDIC,” which stands for the Federal Deposit Insurance Corporation. The logo indicates that the institution is affiliated with the FDIC, and that means the money a person puts in checking, savings and other accounts is insured by the full faith and credit of the U.S. government.
- In the unlikely event of a bank failure, the FDIC guarantees that people get back their savings up to a certain limit. Today, this limit is $250,000 for a single account.
- Banks also use high-tech fraud detection systems — to prevent hackers from draining accounts with fraudulent transactions.
“Something as basic as an insured deposit account gives households the ability to safely deposit income,” Martin Gruenberg, chairman of the FDIC, said in 2017. “I think that’s something we take for granted, but security of savings is not a small thing.”
In some countries, banks are much more opaque. In Iran, for example, people depositing money can sometimes fall victim to bankers’ corruption and speculation. Unregulated lenders have stolen or mismanaged millions of Iranian families’ savings.
U.S. institutions advocate for people who access financial services that don’t live up to the rules.
Captain Will Jamison, an attorney helping clients in the U.S. military, said that one of his clients ran into a crisis when he was transferred to a different military base. The soldier’s bank wouldn’t let him sell his house for nine months. There was no way he could keep paying two mortgages. That’s when the attorney and the soldier contacted the Consumer Financial Protection Bureau, another U.S. agency, and representatives from the bureau resolved the problem within two weeks.
“He told me specifically that if he didn’t have the CFPB on his side, the bank would have steamrolled him,” Jamison said.
The U.S. government also promotes a level playing field by making sure banks and financial companies do not refuse loans or other products based on someone’s race, religion or national origin.
In the United States, many institutions defend the rights — and the life savings — of ordinary citizens. Does your money have similar protections?