Money Monday: 5 Ways to Protect Yourself From Bank Closures

Money

by Lamar Tyler | on September 15th, 2008 | 3 comments

Welcome to another installment on Money Monday. This week we have another guest post by financial planner and money expert Harrine Freeman. She’s been sharing her tips with us for the past few weeks and they’ve been helping our readers to get their finances in order. This week she talks about “5 Ways to Protect Yourself From Bank Closures“.

On Friday, July 11, 2008 one of the largest banks in the county IndyMac, sadly closed its door. Customers were turned away and forced to wait until Monday to make their transactions. This is the second largest failure of a financial institution and the fifth bank to fail this year. On July 14, 2008, the bank was taken over by the FDIC. The FDIC took over the bank because customers removed money from the bank in addition to bank practices that caused the bank to fail.

Customers who have $100,000 or less in the bank will be able to get their money bank. Customers who have more may only get a portion of their money bank. This action brings more light to the economic crisis our country is experiencing. Take heed to this and start changing your spending habits and develop a plan to protect yourself. Here are 5 ways to protect your money.

1. Research. Look at the bank or mortgage company’s financial history for the past 3 to 5 years. If the company’s financial picture has been steadily declining you might want to consider switching companies.

2. Negotiate. Call your bank or mortgage company to find out what would happen if the business went under and what are your options. Develop a plan to protect yourself.

3. Diversify. Make sure your bank is FDIC insured. If not, move your money to a bank that is. If you have more than $100,000 in your bank, split the account into multiple accounts. Open additional accounts at others banks to keep the balance below $100,000. If your IRAs or 401K balance is more than $250,000 the amount over is not insured. Contact your financial advisor to develop a plan to protect your retirement account.

4. Plan. Consider buying a safe for your home or apartment and keeping some money in your safe in the event your bank closes and you need to access money quickly.

5. Deposit. Perform bank transactions early in the morning. This ensures your deposit will be applied the same day. Don’t wait until the last minute to make transactions, this increases the chance that your transaction may not be applied to your account the same day and may cause a check to bounce.

Harrine Freeman

Author of How to Get Out of Debt: Get an “A” Credit Rating for Free Using the System I’ve Used Successfully with Thousands of Clients. Harrine Freeman is a speaker, personal finance expert and business owner. She is the CEO of H.E. Freeman Enterprises, a credit repair and personal finance services company. She also provides personal finance consultations. To learn more about Harrine Freeman or her services, visit her website at http://www.hefreemanenterprises.com. For questions about credit repair and personal finance send an email to consulting@hefreemanenterprises.com.

About the author

Lamar and Ronnie Tyler are the creators of the award-winning blog BlackandMarriedWithKids.com . They also are behind the Amazon.com bestselling DVDs Happily Ever After: A Positive Image of Black Marriage, You Saved Me and Men Ain’t Boys that explores manhood in the African American community. The Tylers are also the proud parents of four children.

http://rawdawgb.blogspot.com rawdawgbuffalo

love the new digs, and you know how i feel about my loot

rawdawgbuffalos last blog post..Slacking on your Macking
Anna

Not sure I would encourage anyone with less than $100,000 to take the money and hide it in their home. Ppl/criminals go through your trash and know where you bank at. A criminals job is to keep one step ahead of us. If they are going through your trash they know if your bank has closed and break in the home to steal the money under your mattress. Money is really insured up to $100,000, now if that money is making interest and goes over that amount I would only transfer/take out enough not earn the interest to go over $100k. One does not have to worry about losing. Even your car insurance company who files bankrupcy has insurance to be able to pay claims. AIG is getting bailed out by the government only because it is cheaper to back them than to let them close. AIG is in 130 different Countries and has a worth of $1.1 trillion invested.

A fire proof safe is a great idea. I heard a story of a person who took $17,000 out of their account only to put it under the mattress and get robbed. (If you want to close out your account). Don’t make a safe visable and don’t put the money in a cookie/coffee jar or in the freezer. And to add, shread, shread, shread. If you don’t have a shreader tear personal info up in the smallest pieces and put it in different trash bags before you take out the weekly garbage.

Just my, not to get taken and to secure not being a member of ID theft.
http://www.hefreemanenterprises.com Harrine Freeman

Hi Anna, thanks for your comment. The point I was trying to make about keeping some money in your home is that if you bank closes like IndyMac did or for some reason you are unable to get to your bank and is has closed for good, you will need some money to pay your bills and to pay for living expenses. In addition, your money is insured but the account holders with the most money in the bank are given their money first, then the other account holders are given their money usually based on the account balance. This can take several weeks or months.

If you have some money in your home you will still be able to pay some bills, buy food or pay for other small expenses.

Just to clarify I would never recommend anyone take all of their money out of their bank account. Many people have done this because of fear of the current economic situation. If everyone takes their money out of the banks all banks with go bankrupt and their will be no more banks so we don’t want to do that.

Thanks.