Sensible advice about bank runs

The best advice about standing in line to get your money out of a shaky bank is:

Don’t.

There’s very little to be gained by spending a day standing in line. Remember, we have federal deposit insurance that will guarantee your deposit up to $100,000. So, just keep that deposit where it is, in the shaky bank, and continue to write checks on it as usual.

But what if you just absolutely have to get that money out? Consider the fact that if you take the money out in cash, it will then be vulnerable to loss and theft — both far bigger dangers than bank collapse.

If you just want to move that money to another bank, go to your new bank and their staff will facilitate moving your deposit over. Don’t go to your old bank and stand in line.

How about people with more than $100,000 in a single account? If you fit that category and you didn’t notice the $100,000 limit, move right away to put your funds into differently titled accounts, each with a balance under $100,000. You may spread your money across different banks or different ownership arrangements, as this FDIC fact sheet points out.

It’s extremely unlikely you’ll gain anything by standing in line to get your money out of a shaky bank. If the bank has already been taken over by Federal officials, as IndyMac has been, you’ll either get all your money (if your accounts are below the $100,000 limit) or the designated proportion. But being there in line won’t change that proportion.

Here’s a long FDIC video if you want to find out even more.