If I had 1 Million dollars...am sure I wouldn't be putting it in savings account...it needs to properly be invested to make more!
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Apple Card Savings Account's Balance Limit Increased to $1 Million
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I’m not sure I get the point of having an account up to the $1 million limit. Couldn’t you just create four accounts and stuff 250,000 each in it and still be covered by the FDIC and gain the same overall profit? I always hated math so someone help me out if I’m wrong here.
Not the same ownership type at the same institution. If you had $1,000,000 spread across four single-owner Apple Savings accounts, you would only have $250,000 total in FDIC insurance coverage.
Oh, I see so then in that case, I think it would be safer to just spread it across four different high savings accounts at different banks.
Yes, that’s true of many people. Like you, I wouldn’t be putting a million dollars in a savings account at this stage of my life. I mean… I don’t have a million dollars anyway, lol. But if I did, it wouldn’t be in a savings account at this stage of my life. Although some would certainly be in a savings account (I have a savings account for my emergency funds — which hopefully I’ll never need, but I have just in case).
But there are also people who are at the stage of their lives (retirement, for example) where wealth preservation is of far more importance than wealth creation. For them, having a large portion of their wealth parked in savings accounts (and/or CDs, bonds, etc.) isn’t unusual.
That would certainly work. A perfectly-fine strategy to spread out the risk of bank failure.
That said… bank failures are a relatively-rare occurrence. We’re all here talking as if a bank failure happens every other day, lol. Parking a million dollars in one account is probably okay. It’s probably more than okay. BUT, yeah, things do happen. So for those fortunate enough to have the problem of having a lot of money (lol), spreading it out over many banks for your own peace of mind is certainly a fine option.
Two interesting points.
1. The US FDIC amount is $250K (€230K), while in Europe the same type of coverage is much lower: €100K EU (£85K UK; basically the same as Euroland).
One wonders why US depositors get over double the protection?
2. in the UK (EU too, IIRC), you get £1m cover up to 6-months for certain life events (eg. inheritance or sold home with money in one ac, et al.)
Do US depositors get something similar, under FDIC or similar?
1. The US FDIC amount is $250K (€230K), while in Europe the same type of coverage is much lower: €100K EU (£85K UK; basically the same as Euroland).
One wonders why US depositors get over double the protection?
2. in the UK (EU too, IIRC), you get £1m cover up to 6-months for certain life events (eg. inheritance or sold home with money in one ac, et al.)
Do US depositors get something similar, under FDIC or similar?
TLDR.
If I had that much $, I would NOT be putting it in Apple Savings account.
If I had that much $, I would NOT be putting it in Apple Savings account.
The “why” is simply that (in 2010) the limit was raised from $100,000 to $250,000 (through the “Dodd–Frank Act”). And the impetus behind that was the 2007-2008 financial crisis.
The limit has been raised a few times over the decades. Initially (back in 1934) the limit was $2,500. According to a random calculator I Googled, $2,500 back in 1934 is $57,540.49 in today’s money.
If one gets the details on the "money" in the FDIC insurance account, there is not much there as compared to the exposure risk now. As a former bank owner, banks are not being charged enough insurance premium to the FDIC to replenish the funds in any reasonable time frame. But of course, the FED can just print a few $250,000 paper bills and hand them out (there was a $1,000,000 bank note many years ago).
Banks are raking in record interest from all of the folks carrying credit card balances. Interest rates of over 25% is usury. But the top dogs in the board rooms are now eyeing the 400' yachts as the 300' is too small......
Banks are raking in record interest from all of the folks carrying credit card balances. Interest rates of over 25% is usury. But the top dogs in the board rooms are now eyeing the 400' yachts as the 300' is too small......
Banks will fail but FDIC will always protect customers. See 2008 and Silicon Valley Bank as examples.
The $250k limit is basically false. It’s infinite
The advertised FDIC coverage is $250,000. There is no obligation for FDIC to pay more than that if they do not want to treat everyone fairly. The small accounts must also be fully covered.....
Runs!? Who younger than Great Depression-folks have seen lines wrapping around the block of citizens desperate to get their money out of the bank before it fails? There have been plenty of bank failures, but no "runs" by common folk because the Feds get there first with wheel-barrows of money, or with other fixes such as the shot-gun sale of the failing bank to some other. FDIC insurance has had a good, stabilizing influence.
Institutional investors are a different story. They will definitely "run" because their billions are at risk - except when the failing institution is "too big to fail." 🙄
There are legitimate reasons to have large amounts of cash (>$250,000) that need to be parked, and an easy way to do so in one location is of some value. So, while the announcement is worthy of being mocked, a lot of investment houses such as Vanguard offer FDIC-insured means to do so. But if you do have that much money in cash, something like VMFXX (backed by federal government securities) is currently paying 5.27%.
Although the government has apparently protected FDIC accounts above $250k just to keep things calm, I certainly would not count on it! Nor would I park a million in Apple's savings account.
Institutional investors are a different story. They will definitely "run" because their billions are at risk - except when the failing institution is "too big to fail." 🙄
There are legitimate reasons to have large amounts of cash (>$250,000) that need to be parked, and an easy way to do so in one location is of some value. So, while the announcement is worthy of being mocked, a lot of investment houses such as Vanguard offer FDIC-insured means to do so. But if you do have that much money in cash, something like VMFXX (backed by federal government securities) is currently paying 5.27%.
Although the government has apparently protected FDIC accounts above $250k just to keep things calm, I certainly would not count on it! Nor would I park a million in Apple's savings account.
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My Apple Savings account just crossed the $2,000 mark. If GS hits the fan, I would not be hurt financially if the $2K vaporized because the FDIC could not pay me. To be realistic, the $90 in annualized interest is more than many stocks payout with many multiples of $2,000 invested.
That sounds like a nice problem to have.... but also what kinda incompetent person has $500k in savings accounts instead of other investment vehicles? Like you can get money market funds that don't get charged (as much) state tax.
Here are the easy steps to not pay taxes on a million dollars.
First, get a million dollars. Second...
Old Steve Martin joke
Below are a couple examples of lines seen outside Silicon Valley Bank branches about a year ago.
Last year there were actual lines of tech entrepreneurs queuing up to get their money out of physical Silicon Valley Bank branch locations. There are videos of it happening.
(And, of course, there were more people online trying to wire their money to different banks.)
It was quite shocking because, yeah, actual lines of people at multiple physical bank branch locations desperately trying to get their money out before the bank failed isn’t a common occurrence.
But yes, the FDIC did stabilize the situation and all depositors at Silicon Valley Bank were covered (even those over the $250,000 FDIC limit).
No it doesn’t. There are LOTS of reasons to want between 250,000-1,000,000 liquid cash. Housing being the big obvious one.
Goldman Sachs is one of the 10 largest banks in the United States. If you think the US government would allow it to fail without fully refunding deposits above and beyond the FDIC limits, I’ll gladly take that bet. Bank runs are not rational. If GS falls, it’s a domino effect up to and including Chase. I don’t think any of these things even happen, because a collapse of the banking system means we will be hunting in the streets instead of arguing on a computer forum.
It does. Most people won’t be placing a million dollars in an Apple savings account.
“Goldman Sachs” is different from “Goldman Sachs Bank USA”. I very intentionally made that distinction multiple times in multiple replies. I even explained what that distinction was in the very reply you are quoting.
Goldman Sachs Bank USA is the consumer banking subsidiary of the investment bank Goldman Sachs. Goldman Sachs Bank USA is the entity with the bank charter and it’s the entity that provides the “Apple Card” and “Savings” accounts (as well as the “Marcus” accounts). And Goldman Sachs Bank USA is (compared to JPMorgan Chase and the like) is relatively small.
If Goldman Sachs Banks USA failed (which could happen without Goldman Sachs proper failing), it wouldn’t be a catastrophic event (simply because it’s not that big of a consumer bank). It would be news worthy, but (since the account maximum limit was only just now raised above the FDIC limit) if it failed today, almost everybody would be fully covered by the FDIC insurance. Some accounts might have gone over the previous $250,000 limit from a few days ago, but most are probably still under the limit as of the time I'm typing this reply.
I see your distinction but it’s largely irrelevant. If the government bailed out SVB and NYSB, they would do the same for much larger institutions to avoid a run on banks. SVB had an unusual number of $250k+ depositors, but I’d imagine all the big banks have a business clientele with that much and more.
The government didn’t bail out Silicon Valley Bank. Silicon Valley Bank failed.
There is a new legal entity (now a subsidiary of First Citizens BancShares) that is called “Silicon Valley Bank”. But the previous legal entity that was formally known as “Silicon Valley Bank” is gone. That previous bank failed.
(-Edit- And to be clear what I mean by that: It’s a new bank subsidiary that is choosing to use the old name.)
What the government/FDIC did was cover Silicon Valley Bank’s depositors (all the insured and non-insured deposits). Depositors were intentionally protected — while the bank, bank’s management and SVB Financial Group’s shareholders were intentionally not protected.
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