Amid political chatter around dismantling federal deposit insurance, experts warn that depositors should prepare contingency plans for protecting their cash if the FDIC were ever abolished.
At a Glance
- Money market mutual funds and U.S. Treasuries offer liquidity and government-level safety, without FDIC reliance
- NCUA-insured credit unions provide an alternative with identical $250,000 coverage
- IntraFi network accounts allow deposits to be spread across banks while maintaining insurance limits
- Payment apps like PayPal, Venmo, and Cash App lack federal insurance and pose risks for large balances
- High-yield savings, CDs, and other instruments remain useful—if held under the right insurance umbrella
1. Treasuries and Money Market Funds
If the FDIC were eliminated, investors could pivot toward assets backed by the U.S. government directly. Money market mutual funds offer short-term debt investments with daily liquidity. U.S. Treasury bills and bonds are considered virtually risk-free, with no FDIC exposure needed for their safety.
These options also benefit from insulation against bank-specific risks, especially relevant if traditional federal safeguards erode.
Watch a report: Where to put your money if banks become unstable
2. Credit Unions: NCUA to the Rescue
While the FDIC backs commercial banks, credit unions are protected by the National Credit Union Administration (NCUA), which insures deposits up to $250,000 per member per institution. Credit unions often offer competitive rates and may be less susceptible to systemic banking crises due to their cooperative structure.
For those wanting an FDIC-equivalent safety net, but outside of the bank sector, federally insured credit unions are a top-tier choice.
3. IntraFi & Account Diversification
Platforms like IntraFi Network (formerly known as CDARS and ICS) allow depositors to spread large sums across multiple FDIC-partner banks—each slice remaining under the $250,000 insurance threshold. This strategy ensures full coverage for high-net-worth individuals or institutions without needing to manage dozens of separate accounts.
It’s a highly effective way to maintain security for deposits well beyond the traditional coverage limit.
Riskier Moves to Avoid
Apps like Venmo, Cash App, and PayPal may feel bank-like, but they don’t provide FDIC or NCUA insurance by default. Fintechs offering “banking services” often partner with real banks, but funds held in transit—or parked above limits—may be vulnerable.
In a post-FDIC scenario, relying solely on neobanks or payment apps would be a risky proposition for large balances.
Strategic Diversification Is Key
To prepare for a potential FDIC repeal and safeguard your savings, consider keeping your funds in Treasuries or well-rated money market accounts, as these options offer greater security. Additionally, leveraging the benefits of insured credit unions or IntraFi-linked banks can provide more protection for your assets. It’s also prudent to avoid using uninsured apps for anything beyond daily transactions, ensuring that your savings remain secure in uncertain times.
If the rules change, your strategy shouldn’t be caught flat-footed. Better to diversify now—before policy catches up with panic.
