Should You Be Worried About a Bank Failure?

The FDIC reports a total of 21 bank failures in 2008, the highest number of failures in a single year since it began reporting closings in 2000. With the increased number of bank closings, it’s only natural to wonder if your bank is next. But predicting a bank failure isn’t so easy. The FDIC, Federal Deposit Insurance Corporation, compiles a list of problem banks on a quarterly basis. However, this obscure list isn’t released to the public. The corporation doesn’t want to alarm consumers which could make things worse. Even so, only 13% of the banks on the FDIC’s list actually fail, according to CNNMoney.com. So, it’s possible that you don’t have much to worry about.

If you want to know how your bank is doing, you can check any of the private bank rating companies published on a list by the FDIC.

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Don’t worry unnecessarily about your bank failing. Instead, you should make sure the deposits you’ve made are FDIC-insured. The FDIC recently increased the insured amount to $250,000 per depositor per bank. This is a temporary amount that lasts until December 31, 2009 when the insured amount will go back to $100,000. Checking accounts, savings accounts, NOW accounts, money market deposit accounts, and CDs (certificates of deposit) are all insured up to the $250,000. Certain retirement accounts are also covered.

These types of accounts are not covered: life insurance policies, annuities, stocks, bonds, mutual funds, or municipal securities.

You may be covered for more than $250,000 at a single bank if you have money deposited in different ownership categories: single accounts, certain retirement accounts, joint accounts, or revocable trust accounts. Visit FDIC.gov for more information on insurance levels and to find out if your bank is insured.