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If we look at the history of banking, you could say the first banks we had were merchants
belonging to the old world who would give grain loans to farmers or traders.
Fast forward to ancient Greece and later during the Roman empire and you had money lenders
and money changers.
These people would often do their business in temples, and if you know your Christianity,
you’ll know that Jesus Christ wasn’t too keen on these people.
But it wasn’t until the 14th century that we saw more modern types of banks, with the
Italians first, and then the Dutch and later the British leading the way regarding banking.
The oldest bank in the world is the Banca Monte dei Paschi di Siena in Italy, opened
in 1472- but no institution is foolproof, and your money may not always be there when
you need it.
Welcome to this episode of the Infographics Show, Why Your Money Is Not Totally Safe in
Your Bank Account.
Let’s start with the website The Balance, which is usually a good source of information
when it comes to anything relating to money.
On the safety of leaving your money in the bank, one article on the website tells us
if you know about the USA’s Great Depression you might well be wary about trusting banks.
It says that still today there are many people that still don’t go near banks.
But why is that?
Well, if a bank goes under, and it is not insured, then yes, you could lose your money.
But it is very unlikely that your bank is not insured, or at least in some countries.
Bankrate tells us that the if Federal Deposit Insurance Corp.
(FDIC) has insured your bank and you have anything up to $250,000 in your account, you
won’t lose anything.
The problem is, says Bankrate, anything over that you might not get back if the bank fails.
We are told that if you do have more money than that and are worried, you should spread
your money in other banks that are also insured by FDIC.
You might also put your funds into a Certificate of Deposit.
So, check out your bank is insured and if it is and you have bags of cash, spread the
money out.
The experts tell us that if you don’t follow these two simple suggestions then indeed your
money might not be safe.
We are also told that you should keep tabs on the news.
If there are rumors your bank is being sold, then it’s likely it has problems.
You can also check out Bankrate’s website which gives a grading system to banks relating
to how safe they are.
Apparently, the FDIC has a list of banks it sees as perhaps not very safe, but it keeps
this list under wraps.
Saying that, if you search enough you will be able to find ‘problem bank’ list, though
these days the banks on that list number only about 100.
If the problem banks can’t seem to get out of trouble they are often taken over by stronger
banks.
Oh, and if your bank is taken over don’t think that your loan will just disappear.
It will just go over to the bank that has swallowed it.
The problem is, as happened during the Great Depression and during the last banking crisis,
when people start to worry about their bank going down, they generally head straight to
the bank to take their cash out.
This of course overwhelms the bank, and we call this a Bank Run.
Banks cannot just pay everyone their cash.
When this happened during the Great Depression the American government stepped in to try
and smooth things out.
The result of which was the creation of the FDIC.
On the FDIC website it says that it will cover most things, but some it will not.
This includes stuff in a safety deposit box, which might be stolen or damaged due to something
like a fire.
You will have to make sure the contents are insured.
If someone steals your money another way, most banks will have what’s called a “banker's
blanket bond”.
This should cover theft and other matters.
If someone managed to hack your account, the FDIC says you “may” be covered by the
Electronic Funds Transfer Act.
You just have to make sure you are covered.
Other countries have similar insurances.
In Australia we are told $250,000 for each account holder is insured by the government’s
Financial Claims Scheme.
But again, you best check that your bank is licensed.
Still, like in America, if you had over $250,000 in your account and the bank collapsed you
could certainly lose what is left.
This is the danger and the reason banks are not safe if you have a lot of cash in one
place.
Not all countries have such good safety nets.
We were told in 2013 that people who had money in the Bank of Cyprus after a collapse lost
47.5% of their savings of anything over $132,000.
In 2018, the British press tells us that British expats in Portugal lost thousands and thousands
when Portugal’s biggest bank, Banco Espirito Santo, collapsed.
Other sources also tell us that if your money is FDIC insured or insured in a similar way
in another nation you really don’t need to panic.
The problem is, some people don’t know anything about this and so bank some place that is
not insured.
This is when your cash is not safe.
As you know, your money is not kept in some vault somewhere but there is an electronic
and some physical records of it.
So, what happens if a bank’s system just goes down?
We are told that in the unlikely event that this happens, there should be backups.
Nonetheless, some people say it’s always best to keep some records yourself.
This should not be hard.
But if your money just disappears and it seems that this was due to your negligence, then
you might find yourself having to get your money back and this might not be easy.
Does this happen, money just going missing from a bank?
It seems yes.
In 2018, the Canadian press wrote a story about money in people’s accounts just disappearing
into thin air.
One of the victims of missing money said this to the media, “You're trained your whole
life that you put your money in the bank and it's always going to be there for you.
I never thought in a million years that I would have a problem.”
It seems in his case his stock certificates had been lost and it wasn’t his fault.
For months that money was missing, but eventually the money was returned with an apology from
the bank.
Still, this is quite worrying and some research shows us this kind of thing does happen to
others.
The UK press has written stories of technical glitches leading to people not getting a wage
that was paid in, but it seems that eventually these worried people do get their money in
the end.
So, all in all, only a certain amount of your money is safe in insured banks.
This you must know, and you should of course check out if your bank is insured and how
stable it is.
People have certainly lost money in the past, and you must ask yourself if you feel your
money is better in a bank, under your mattress, or invested?
If your money isn’t safe in a modern bank vault, can you imagine how unsafe your passwords
and credit card information is over the internet?
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What do you think?
Tell us in the comments.
Also, be sure to check out our other show Top 10 Most Dangerous Hackers.
Thanks for watching, and as always, don’t forget to like, share and subscribe.
See you next time.