As American consumers are in a shopping frenzy, concerns about money are making their way to the surface. Thousands of Americans have received layoff notices since the outbreak of the novel coronavirus. And, thousands more are expected to follow suit.
During the 1930s Great Depression, 11,000 banks in the United States vanished, leaving only 13,000 to pick up the pieces. As the fears grow, some of the nation’s savers are questioning whether or not their money is safe in banks. Some have even taken their concerns to social media, saying they fear that history will repeat itself.
Pharmacies, retail stores, and supermarkets throughout the country are experiencing shortages on both essential and nonessential items. The shortages have been contributed to mass hysteria related to the COVID-19 pandemic. If consumer fear heightens, many may be tempted to withdraw their savings from banks.
On March 18, the Federal Deposit Insurance Corporation (FDIC) issued a statement reminding American consumers that banks insured by the FDIC continue to be the safest place to store money. In the statement, the agency also warned of “recent scams where imposters are pretending to be agency representatives to perpetrate fraudulent schemes.”
The FDIC claims to insure funds up to $250,000 per account holder. Many FDIC-insured banks have regulated hours to remain in compliance with the Centers for Disease Control (CDC) “social distancing” guidelines.
JPMorgan Chase, Capital One, Ally Bank, HSBC, BB&T, TD Bank, Bank of America, and SunTrust are all insured by the FDIC.
Community, military, educational, corporate, and associational credit unions are insured by the National Credit Union Administration (NCUA). The independent federal agency is very similar to the FDIC, as it protects deposits at all federal and most state-chartered credit unions. The insurance coverage offered by the NCUA is up to $250,000 per depositor.
When it comes to insolvency risk, PayPal depositors are not insured by either the NCUA or FDIC. Many consumers are not aware of how the online payment processor works. Paypal relies on Wells Fargo to process electronic payments and checks that are transferred through a network known as Automated Clearing House (ACH).
Since PayPal is not insured by the FDIC, experts recommend keeping PayPal account balances at a minimum.