If I understand correctly, the FDIC insures your deposits for up to $100,000 (or is it $250,000?). What does this insure against, exactly? Bank failure?
Also, what if I have, say, $5 million? Do I need to spread the money out into 50 accounts? If I have the whole $5 million in one account at Fred’s Bank and it goes under, am I SOL?
Also, do banks just eat the cost of a robbery? I know that most of the money in a bank is just entries into account books, but obviously they have to have a certain amount of cash on hand. Say a robber manages to make of with $20,000. Does the bank just debit the $20,000 divided equally among the account of its account holders (say, $5 per account for 4,000 accounts)? Or do they just suck up the loss as a cost of doing business?
Banks certainly don’t just eat the cost of a robbery. I don’t know if they carry insurance against robbery(it would make sense that such a thing exists). They don’t pass losses on to the customer with a charge on your statement that for “robbery” fees or anything like that, but they certainly can increase the fees for banking with them, or drop benefits like free checks with your account.
You can get some added protection, if you’re married. John and Mary can have I think up to five accounts, each insured at a hundred grand: One in John’s name, one in Mary’s name, one in John’s name with Mary as co-signer, one in Mary’s name with John co-signer, and one more, I think John and Mary equally.
Isn’t robbery one of the things covered by the FDIC insurance?