According to the Small Business Administration, there are over 1.59 million businesses and 257,430 households in the United States that are currently sitting on more than $250,000 in cash. This amount is significant because the FDIC only guarantees a particular account type at an individual bank for $250,000. For entities that exceed this amount, the risk of bank failure is absorbed by the depositor.
Obviously, this is an unnecessary and avoidable risk. It is not just a hypothetical risk. In 2013, during the banking crisis in Cyprus, a man had roughly $1,000,000 in a checking account of a Cyprus bank that went bankrupt. It was his life savings. He was left with only $100,000 because that was the limit of the Cyprus government’s insurance limits. As the article stated, “I went to sleep on Friday a rich man. I woke up Monday a poor man.” Because it is … Read the rest of this article!