Dave Ramsey Said Not to Worry About Your Bank Collapsing. Here's Why

There's a very good reason most people don't need to worry about bank collapses.

If you have money in the bank, as most people do, then the news in recent weeks of several major banks failing may have you feeling pretty nervous right now.

The good news is, this isn't something for you to be concerned about. In fact, as finance expert Dave Ramsey explained, the vast majority of people have no reason at all to worry about losing their money if a bank fails. Here's why.

Dave Ramsey says your money is safe in the bank

Ramsey provided a simple explanation for why bank failures are not likely to affect most people financially in any way.

"If the economy suddenly tanks or some banks fail, there's absolutely no reason to head to your local bank branch and withdraw a suitcase full of cash," Ramsey said. "Your money is much safer in a bank than it would be stuffed under your mattress (or anywhere else), and that's because bank deposits up to $250,000 are insured by the FDIC."

The FDIC, or Federal Deposit Insurance Corporation, was created by the federal government to provide insurance for bank deposits. Banks pay premiums and the FDIC basically ensures people don't lose money -- as long as their deposits are insured.

Is your money protected by the FDIC?

Ramsey is absolutely right that the FDIC protects most people from losses in the event their bank collapses. But you need to make sure you choose a bank or financial institution that offers FDIC protection. The vast majority of institutions do, but if you want to be sure yours is under the FDIC umbrella, you can check for an FDIC sign at your bank branch or use the BankFind tool on the FDIC website.

You should also know how FDIC insurance works. Specifically, up to $250,000 per depositor and per account type is protected at each bank. So if you have less than $250,000 in a checking account or savings account, you can rest assured that you will get your money back if something happens to your bank. The FDIC will make sure of that.

If you have more than $250,000, however, you will need to do a little bit more in order to make certain you don't have money at risk. You can use multiple different banks and split your money up, putting up to $250,000 in your account at each financial institution. Or you can open several kinds of bank accounts with one institution, since the $250,000 insured limit is per account type and per depositor.

Ultimately, this isn't a problem that many people have to worry about. If you're lucky enough to have more than $250,000 in the bank, you should easily be able to find a workaround to make sure that money is fully covered by insurance. Or if you have really substantial sums for yourself or your business, work with financial professionals to find a solution that works for you.

So, don't be afraid to keep up your banking relationships, despite these recent collapses, as long as you check your account has that all-important FDIC protection in place.