Wouldn't it be great if this question was simply answered with "Yes!"?

With regard to your checking and savings deposits at FDIC-insured banks, it can be. You can trust that the money will be there even if the bank isn't. The only caveat is that the maximum amount covered by FDIC insurance is $250,000. Stay under that figure by keeping money in different banks, not a different branch of the same bank, and you can trust that you will get your money back.

New Legislation
But trust goes beyond just knowing your cash will be there when you need it. Recently, a topic of discussion with regulators has been how to best prevent the financial crisis from happening again. But enacting new legislation isn't likely to be easy, and many financial firms have already started to lobby heavily for their version of change. On the surface this may sound reasonable, as it will allow for profits to be less encumbered then they might be otherwise. (Read more in Are Your Bank Deposits Insured?)
Profit-Making Institutions
This brings up an issue that many people know, but may not keep in mind: banks are profit-making institutions. Banks are borrowing money from you and then lending it out to others; they take the loan payment, pay you your interest, and keep the difference. So their incentive is to pay you the least amount they can, and to charge the most they can for loans, which may also be to you. (Find out how to get the bank to pay you for using their services, not the other way around. Read Cut Your Bank Fees.)

Trust Banks to Make Profit
Furthermore, banks were allowed to combine with investment firms and insurance companies in 1999, due to the Financial Modernization Act. So, it's also in a bank's best interest to sell you a variety of products, some of which you may not really need, at the highest price possible. This is true for all profit-making firms, but for some reason many people lose sight of this incentive with banks. Perhaps it stems from the idea that you can trust banks to give you back the money you deposited. But it's clear that you can also trust banks to act like profit-making firms and do what's in their own interest.

So, "Yes!", you can trust your bank, in many different ways.

Related Articles
  1. Professionals

    10 Must Watch Documentaries For Finance Professionals

    Find out about some of the best documentaries that finance professionals can watch to gain a better understanding of their industry.
  2. Markets

    Is Another Bear Market Ahead?

    With market volatility recently reaching its highest level, investors are questioning what the outlook is for U.S. stocks in 2015 and beyond.
  3. Stock Analysis

    Why Is GE Selling Some of Its Subsidiaries?

    Learn why GE is selling off a substantial amount so it does not have to comply with increased government regulation in the wake of the 2008 financial crisis.
  4. Stock Analysis

    JP Morgan Chase & Co. Vs. Bank of America Stock

    Examine two of the big four U.S. money center banks, Bank of America Corporation and JPMorgan Chase & Company, by comparing important equity evaluation metrics.
  5. Investing Basics

    Understanding the Inverted Yield Curve

    An inverted yield curve occurs during the rare times when short-term interest rates are higher than long-term interest rates.
  6. Economics

    What is a Loan Loss Provision?

    Banks set aside loan loss provisions to cover losses from bad loans.
  7. Economics

    How Does the Puerto Rican Debt Crisis Affect the US?

    Learn about the specifics of the Puerto Rican debt crisis and why economists disagree on how significantly it could affect the United States.
  8. Forex

    Brazil's Recession and its Effect on the World Economy

    In 2010, Brazil's economic growth was a precursor to arrival on the world stage. Five years later, the economy is in shambles. What happened?
  9. Economics

    Is U.S. Inflation on the Horizon?

    Inflation, or the general price level of all goods and services in an economy, has remained subdued in the years following the Great Recession. Given recent developments, is the U.S. on the verge ...
  10. Economics

    Understanding Retail Banking

    Retail banking refers to the mass-marketed, consumer-oriented products and services offered by the local branch of the commercial bank.
  1. What are the risks of annuities in a recession?

    Annuities come in several forms, the two most common being fixed annuities and variable annuities. During a recession, variable ... Read Full Answer >>
  2. How does a bank determine what my discretionary income is when making a loan decision?

    Discretionary income is the money left over from your gross income each month after taking out taxes and paying for necessities. ... Read Full Answer >>
  3. How does the risk of investing in the industrial sector compare to the broader market?

    There is increased risk when investing in the industrial sector compared to the broader market due to high debt loads and ... Read Full Answer >>
  4. How can I hedge my portfolio to protect from a decline in the retail sector?

    The retail sector provides growth investors with a great opportunity for better-than-average gains during periods of market ... Read Full Answer >>
  5. What is the correlation between term structure of interest rates and recessions?

    There is no question that interest rates have enormous macroeconomic importance. Many economists and analysts believe the ... Read Full Answer >>
  6. Why should an investor in the retail sector consider the Consumer Confidence Index?

    Investors in the retail sector should consider the Consumer Confidence Index, or CCI, because it measures how consumers feel ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Gross Profit

    A company's total revenue (equivalent to total sales) minus the cost of goods sold. Gross profit is the profit a company ...
  2. Revenue

    The amount of money that a company actually receives during a specific period, including discounts and deductions for returned ...
  3. Normal Profit

    An economic condition occurring when the difference between a firm’s total revenue and total cost is equal to zero.
  4. Operating Cost

    Expenses associated with the maintenance and administration of a business on a day-to-day basis.
  5. Cost Of Funds

    The interest rate paid by financial institutions for the funds that they deploy in their business. The cost of funds is one ...
  6. Cost Accounting

    A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step ...
Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!