If you’re worried about your nest egg, you’re not alone as searches for “is my money safe” have skyrocketed in the past few days as people worry about the impact of Silicon Valley Bank’s crash.
The Google Trends data, discovered by small business accounting solution akounto.com, reveals that Americans are unsure how safe their money is in the bank, with searches for “is my money safe” increasing by a massive 400% in the past two days.
A spokesperson for akounto.com commented on the data: “It’s natural for people to be concerned about the money in their bank account when they see news of a major bank collapse, however on this occasion it’s unlikely to affect the average person.
“Banks operate on a process called fractional reserve banking, which means they must keep at least 10% of all customers’ deposits at hand so people can make withdrawals.
“The remaining money is often lent to customers or put into stable investments such as US treasuries. The latter ensures that banks get a nearly guaranteed rate of return and generate more money than was given by customers.
“SVB took nearly 100 billion dollars of customers’ money in 2021/2022 and invested it in government-backed bonds. A significant portion of this money was locked away for 3.6 years at an interest rate of 1.79%.
“Many of the customers at SVB were tech firms in Silicon Valley, and the reason they all began pulling funds back was lack of interest from venture capitalists, meaning that they needed to source money from business accounts to pay operating costs. And when lots of customers began withdrawing their money, the bank ran out of available funds.
“People who are worried about keeping their money safe should stay with a larger institution that has a better chance of being diversified. It’s also wise to never keep higher than the amount covered by the Federal Deposit Insurance Corporation, which is $250,000, and if possible, keep your savings across multiple accounts.”
The study was conducted by Akounto, the all-in-one accounting software to manage invoices, expenses, financial reports, payments, and taxes.