Welcome to Basically Money!

Question

3

In light of the events in the banking market over the last few years, there have been calls from some quarters for investors to move their money from the larger banks, so they are no longer "too big to fail".

If you withdraw your money from one of the giant banks and move it to a smaller, local bank. Are you at any more risk investing in the smaller bank, or does the same level of insurance apply? How do you know you are covered?

I'm in the UK, but the same question applies for other countries too.

flag	asked Jan 23 at 13:19 Rich Seller 1,506●1●10

Yossi Dahan · Answer 1 · 2010-01-25 23:08:26Z UTC

3

In the UK I believe the first £50,000 in each bank are secured by the government, so are very safe but one has to check what 'each bank' means as some are members of the same 'group'.

See the FSCS

answered Jan 25 at 23:08

Yossi Dahan
376●4

MrChrister · Answer 2 · 2010-01-24 03:30:11Z UTC

1

In the US, I would say the risk is exactly the same. If your accounts are withing the FDIC amount (currently $250,000) your balance is 100% covered in case of a failure.

You are giving up a larger network of ATMs in some cases. You are also perhaps giving up the number of branches you can visit, the hours the bank is open and maybe how well the website works. The features might be less, but the protection for your deposits is the same.

answered Jan 24 at 3:30

MrChrister
3,047●2●11

	interesting, in the UK, most banks are members of the LINK network, so you can use other bank's ATMs without charge. Is there not a similar system int he US? – Rich Seller Jan 25 at 11:39
	Not to that scale. Most credit unions belong to a network, and some smaller banks do that I am aware of, but most large institutions will charge you a fee to use a non branded ATM. The awesome thing is, you get a fee from your bank AND the ATM you take money from. – MrChrister Jan 25 at 16:41

What is the risk to me of moving my money to a smaller bank?

2 Answers