Do I Need to Know If My Bank Is Healthy?
Should I be concerned about the health of an FDIC-insured bank or savings institution where I have deposits?
If your deposits are within the FDIC's insurance limits, as is the case for most bank customers, those deposits are safe regardless of the financial condition of your bank. The FDIC's guarantee to protect against the loss of insured deposits if an FDIC-insured bank or savings associations fails is ironclad. The FDIC has handled the failure of more than 2,200 insured depository institutions in its 75 years of existence and, as FDIC Chairman Sheila C. Bair states, "no one has ever lost so much as a penny of FDIC-insured deposits — not a single penny." Depositors at a failed bank also get quick access to their insured funds, usually by the next business day after the institution closes.
What if some of my deposits are over the FDIC's insurance limits?
Deposits above the FDIC's coverage limits may be at risk if the bank fails. To make sure all your deposits are fully protected, consult with the FDIC or your bank and, if necessary, make adjustments to bring your accounts within the federal insurance limits.
If I want information about my bank's health, where can I go?
There are private companies that provide their own ratings and opinions of FDIC-insured banks and savings associations, often for a fee. The FDIC posts information about these private companies on their Web site at www.fdic.gov/bank/individual/bank/index.html as a public service and not as an endorsement or confirmation of the companies or their conclusions.
FDIC Insurance: How Can I Be Sure I'm Fully Insured?
What is covered by FDIC insurance?
If an insured bank or savings association fails, the FDIC protects deposit accounts, including checking and savings accounts, money market deposit accounts and certificates of deposit (CDs), against any loss up to the federal limits.
What is not protected by FDIC insurance?
FDIC insurance doesn't protect against losses on nondeposit products, such as stocks, bonds, mutual funds, life insurance policies, annuities or municipal securities, even if they were offered by insured banks.
For more information about what is and is not covered by FDIC insurance, go to www.fdic.gov/deposit/investments/index.html or contact the FDIC.
How much coverage does the FDIC provide?
The basic insurance coverage is $100,000 per depositor per insured institution, but you may qualify for more than $100,000 in coverage at one insured bank if you own deposit accounts in different "ownership categories." For example, your deposits in:
• Single accounts (in one name only) are insured up to $100,000;
• Joint accounts (for two or more people) are protected to $100,000 per owner;
• IRAs and certain other retirement accounts are covered up to $250,000; and
• Trust accounts can be protected up to $100,000 for each named beneficiary provided that FDIC requirements are met. For example, if a mother has a $300,000 deposit account in connection with a living trust (a legal document for distributing her assets upon her death), and she is leaving all the deposits equally to her three children, that account would be insured in full up to $300,000 ($100,000 for each child).
Because of the separate insurance coverage for deposits in different categories, a family of four could have well over $1 million in deposit insurance coverage in one FDIC-insured institution. To learn how, see the FDIC publication "Your Insured Deposits," which is online at www.fdic.gov/deposit/deposits/insured.
How can I know that all my deposits are within the FDIC's insurance limits?
If you (or your family) have $100,000 or less in all of your deposit accounts at the same insured bank, you don't need to be concerned about the safety of your money. That's because the basic insurance limit is $100,000 per depositor per insured bank, plus an additional $250,000 per depositor for certain retirement accounts.
If you have questions about your insurance coverage, visit www.fdic.gov/deposit/deposits, which features our Electronic Deposit Insurance Estimator (EDIE), an interactive Web site that can be used to calculate your deposit insurance. You can also call FDIC deposit insurance specialists toll-free at 1-877-ASK-FDIC (1-877-275-3342).
What if some of my deposits are over the insurance limit? How can I get them fully insured?
In general, you have two options. One is to divide the funds among various ownership categories at the same institution. But this is an option you need to think about carefully because, for example, moving some money from a single account into a joint account with someone else means that you are giving that other person legal ownership of the money. Your second option is to move funds over the insurance limit to accounts at other insured institutions. This option works well for people who don't want, or don't qualify for, other ownership categories at their existing bank.
What Happens If a Bank Fails?
How soon after a bank fails can I expect to have access to my insured money?
Federal law requires the FDIC to make payments of insured deposits "as soon as possible" after the failure of an insured institution. In most cases, the FDIC makes insured funds available to depositors quickly, usually on the first business day after the bank is closed.
The preferred – and most common – way to pay insurance on deposits involves finding a healthy bank to quickly buy the rights to assume the insured deposits and other business of the failed bank. Depositors automatically become customers of the assuming bank, and offices of the failed bank reopen under the name of the acquiring institution, usually by the next business day. Depositors will have full access to their insured funds at branch offices or by check, automated teller machine and debit card.
If the FDIC cannot find another institution to buy the failed bank's insured deposits, one of two things can happen. The FDIC can transfer the insured deposits to a newly created bank that would be operated by the FDIC. This new bank, referred to as a "bridge bank" or "conservatorship," enables depositors to access their insured funds by the next business day and to maintain other banking services until the FDIC can find a buyer for the new bank. The other alternative is for the FDIC to issue checks directly to depositors, in amounts up to the federal insurance limit. That process can take longer than one business day but usually not more than three business days.
No matter how the FDIC resolves a failed bank, some types of deposits present special challenges that mean it may take the FDIC longer to obtain documentation that is needed to finalize the insurance payments. Examples include accounts linked to a formal written trust agreement, deposits placed by an administrator of an employee benefit plan, and bank certificates of deposit (CDs) sold to the public by deposit brokers. In the case of the latter, the bank's records often only note the name of the broker, not the individuals who made deposits, and it can take more time for the FDIC to gather documentation from the broker and make an accurate insurance determination.
What happens to my money that is over the FDIC's insurance limits?
Let's say you alone have one deposit account at a bank with a balance of $105,000, including interest earned. If your bank fails, you'll immediately be paid $100,000 covered by FDIC insurance and you'll receive a "claim" against the closed bank for the remaining $5,000 that is not FDIC-insured. The amount you recover on your uninsured deposits will depend on how much the FDIC recovers by selling the bank's assets. While that process can take several years, most payments to uninsured depositors are made within a year or two of the bank failure. In some cases, the FDIC is able to make an advance payment to uninsured depositors.
What about other bank services such as safe deposit boxes, loans, credit cards and securities held by the trust department?
Access to the contents of safe deposit boxes typically will be available the next business day after the bank closing.
A loan or credit card you have at the failed bank will either be sold to a healthy bank or retained temporarily by the FDIC, and you'll receive written instructions on where to send future payments. Either way, your use of these loans and your obligation to pay will continue until you are instructed otherwise, in writing, by the acquiring bank and the FDIC.
Securities and other assets held in trust, fiduciary or custodial accounts at a bank are not assets of the failed bank and are not subject to claims by the failed bank's creditors. These assets will either be returned to you or arrangements will be made for another institution to become the new custodian or trustee of your accounts.
How can I get more information about what happens if a bank fails?
You can find useful information, including the FDIC brochure "When a Bank Fails," at www.fdic.gov/bank/individual/failed.
An FDIC-Insured Depositor's Bill of Rights
1. You have the right to automatic deposit insurance coverage when you open a deposit account at an FDIC-insured bank, with no additional cost or action on your part.
2. You have the right to separate FDIC insurance coverage for deposits held at different FDIC-insured banks.
3. You have the right to confirm that a bank is insured by using the FDIC's Bank Find service at www2.fdic.gov/idasp/main_bankfind.asp or by calling the FDIC toll-free at 1-877-275-3342.
4. You have the right to deposit insurance coverage of $100,000 for your deposits at an FDIC-insured bank — up to $250,000 for your IRA deposits.
5. You have the right to deposit insurance coverage of more than $100,000 at a single bank when deposits are held in different "ownership categories," such as single, joint and trust accounts.
6. You have the right to confirm that your deposits are within the insurance limits by using the FDIC's Electronic Deposit Insurance Estimator and other online resources at www.fdic.gov/deposit/deposits or by calling the FDIC at 1-877-275-3342.
7. You have the right to be informed when a financial product offered by your bank is not covered by FDIC insurance.
8. You have a right, if your bank fails, to prompt access to your insured deposits.
9. You have the right, if you are an uninsured depositor, to receive distributions from the receivership as the sale of assets permits.
10. You have the right to sleep well, knowing that since the creation of the FDIC 75 years ago, no depositor has ever lost one penny of insured deposits.
Reminder: Beware of Mortgage Rescue Frauds
Thieves posing as lenders or housing counselors continue to offer to "help" people at risk of losing their homes to foreclosure. Beware of anyone who charges a large upfront fee and "guarantees" (falsely) to save your home from foreclosure. Instead, seek help from a reputable housing counselor certified by the U.S. Department of Housing and Urban Development (HUD). Find one by contacting the nonprofit Homeowner's HOPE Hotline (1-888-995-4673 or www.995hope.org) or get a referral directly from HUD (1-800-569-4287 or www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm).
