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Savings and FDIC protection

By Terry Savage on March 23, 2023 | Chicken Money

Hi Terry!

Q1 – what are your thoughts regarding some of the digital-only banks offering high savings APY – for example UFB Direct (Axos)? They have a 5.02% apy. I know FDIC covers up to 250k, but still wondering if it is more risky to move money into these institutions that may be aggressively looking for deposits to cover their books shortcomings.

Q2- All this talk about FDIC Insuring up to 250k,has me wondering – how long does it actually take for FDIC to kick-in, if my bank can’t cover the deposit? Would a customer, wait days, weeks, months to get their money?

And as always, thank you for your just-in-time analysis. There is no one better than you, IMHO. You tell it like it is, and offer common sense, straight-forward and comprehensible explanations.

Terry Says

Thanks for your nice note. In all previous bank “failures” depositors had access to their insured deposits the next business day. Govt takeovers of failing banks typically happen over a weekend. They find a successor bank and re-open under a new name. And then people stop worrying.
No one has seen a contagious bank run –although there were several closed over the same weekend back in the days of the S&L crisis in the late 1980s.
I have no particular thoughts about FDIC-insured digital banks — except that the few days you may waste in getting your money transferred may offset some of those higher yields.

My personal preference is this: https://www.terrysavage.com/t-bills-beat-cds/

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