How do millionares/billionaires work around the $250,000 FDIC insurance limit?

Normal people with just over the limit will split their $ across several banks.

Somebody with more than $1million does not have it in cash accounts. So as @RocketGuy described, they have three or four cash accounts at different banks, all insured. The rest they have invested.

A prudent investor has diverse holdings so that the risk from any one asset going to zero is minimized.

The majority of their cash is invested in Wall Street, real estate, or another preferred investment or two that meets their needs earning them a significant return & they liquidate as they need cash. We recently had one of our wealthy socialites die & she was worth several million, but only had a grand total of $58 in her checking account.

This is different for companies that must operate with more liquid cash than this regularly. They are at more risk than individuals. They don’t really get around this. It’s a risk they must bare.

They work with Private Banking Firms. A complete different set of rules and Insurance of their funds. Those organizations don’t even talk to you unless you have over $25,000,000 to start with.
I work for the oldest (205yrs) and one of the largest private investment banks in the United States. It’s a different game managing old money.

They spread their money around.

If I remember correctly, if you have a joint account, you get $250K each for a joint account, so $500K, and then an additional $250K each in individual accounts, per institution. Plus, millionaires usually have brokerage accounts, which are not even insured by the FDIC, unless they are holding a CD in the account that is insured. A lot of millionaires have money in real estate also because the tax laws are so favorable.

@JLeslie

FDIC insurance covers $500k joint per bank (Institution) not bank account.

More than half a million for husband & wife means money needs to go to different bank, not a different branch/account, for FDIC insurance.

@Tropical_Willie That’s what I always thought, but then recently I read you can have up to a million the way I described. Now, I am not sure what is correct. I wouldn’t keep a million in one bank no matter what. When I was a teenager my bank account was frozen for months during the S&L scandal. I never would keep all of my money in one place nor keep that much in one place.

Primarily, they invest their money to protect it from taxes. Having it the bank doesn’t make them much money.

@Tropical_Willie Here’s a recent article, but I read a different one a short while back. https://www.washingtonpost.com/business/2023/03/10/faq-fdic-insurance/

Yup, @JLeslie each account is treated as a separate account for a total of $2 million.

^^I used bank synonymously with institution. Are you defining bank as a branch?

IRA, checking/savings, trust . . . different accounts

Branch is just a different address for main company.

Generally, rich people don’t keep large balances in the bank. Banks tend to give low rates of return. You want your money growing faster than it will in a bank. The Signature Bank offered a better rate of return than most, but a solid diversified portfolio still would have outperformed it.