American Banking and Market News (2024)

FAQs

What happens to your money if a bank closes? ›

If your bank closes, the FDIC will either try to move your money to another bank in good standing or mail you a check for up to the insured amount. If it doesn't move your money, the bank should mail you a check within two business days of closing.

And in the 1930s there was no such thing as deposit insurance--this was a New Deal reform. When a bank failed the depositors were simply left without a penny. The life savings of millions of Americans were wiped out by the bank failures.

Generally, credit unions are viewed as safer than banks, although deposits at both types of financial institutions are usually insured at the same dollar amounts. The FDIC insures deposits at most banks, and the NCUA insures deposits at most credit unions.

The Federal Reserve found that in the U.S., 13% of adults are underbanked as of 2021, meaning they have a bank account but regularly use alternative financial services, and 5% are unbanked meaning they have no bank account at all. The unbanked population is made up of around 13 million people in the U.S.

By maintaining multiple accounts across several FDIC-insured banks — or at least multiple accounts at one FDIC-insured bank — you can protect your money in the event of a bank failure. Two wise ways to do this are with high-yield savings and certificate of deposit (CD) accounts.

The FDIC insures bank accounts for up to $250,000 per depositor, per ownership category, per bank. If a bank fails, insured deposits will be moved to another FDIC-insured bank or paid out. You'll usually get a Receiver's Certificate for money that isn't covered by FDIC insurance.

Republic First Bank failed on April 26, 2024. Citizens Bank of Sac City, Iowa, failed on November 3, 2023. Heartland Tri-State Bank failed on July 28, 2023.

U.S. investigations

Internal investigations at the FDIC and Federal Reserve noted that deregulation, not subjecting medium-sized banks to high scrutiny, reduced enforcement of remaining regulations, and government staffing shortages weakened oversight and allowed mismanagement of banks to cause their collapse.

Instead, the money's coming from the Deposit Insurance Fund, which is part of the Federal Deposit Insurance Corporation, or FDIC.

Through right of offset, the government allows banks and credit unions to access the savings of their account holders under certain circ*mstances. This is allowed when the consumer misses a debt payment owed to that same financial institution.

What is the safest bank to keep your money in? ›

JPMorgan Chase, the financial institution that owns Chase Bank, topped our experts' list because it's designated as the world's most systemically important bank on the 2023 G-SIB list. This designation means it has the highest loss absorbency requirements of any bank, providing more protection against financial crisis.

No. Credit unions are insured by the National Credit Union Administration (NCUA). Just like the FDIC insures up to $250,000 for individuals' accounts of a bank, the NCUA insures up to $250,000 for individuals' accounts of a credit union.

While the median bank account balance is $8,000, according to the latest SCF data, the average — or mean — balance is actually much higher, at $62,410.

Today, Black Americans are the most likely of any racial group to be unbanked or underbanked. While 2.1 percent of white Americans are unbanked (have no savings or checking account), 11.3 percent of Black Americans are unbanked, according to the latest FDIC survey.

If your bank proceeds with the closure of your account, it should still give you your money back. This can take time, however, if an investigation is ongoing or they suspect criminal activity.

If money gets sent to a closed bank account and the bank accepts the transfer, the bank may issue a check to the former account holder. Alternatively, the bank can reopen the account or contact the person and ask if they want to reopen the account to claim the funds.

Of course, the bank must return any remaining funds in your account but may hold on to them to cover any negative balance or fees. In some cases, the bank may hold the funds if your account is flagged for suspicious activities, which is increasingly common.

When a bank is at risk of going bust, there is usually a run on the bank when the bank's customers try to withdraw the money in their accounts before the bank closes. There is a government scheme in place which will compensate account holders of a bank that has failed, but only up to a limited sum.