What To Do If Your Bank Fails

Thirteen banks have already failed this year, and, according to the Federal Deposit Insurance Corporation (FDIC), the number of banks at risk of failing has almost doubled in the last two years.

Because many of us are concerned about other banks that could also fail, we want to tell you how to protect yourself should your bank be next.

Dolan Straight Talk Tip: The most important point to remember is that no depositor has EVER lost "one red cent" of insured funds. By "insured" we mean each individual account up to $100,000 and IRAs (and some other qualified plans) up to $250,000. The FDIC does not have to cover anything over these amounts but may choose to if it raises enough money through the sale of bank assets. But don't bet on it.

5 Things You Must Know

We hope you never have to deal with your bank closing, but in these tough times, you want to be prepared just in case. Here are five things you need to know to survive a bank failure:

1. Be sure your accounts do not exceed FDIC insurance limits. IndyMac has about $1 billion of deposits that exceed limits, which is a real shame. A significant portion of that money will probably be lost. For more information on FDIC insurance coverage of your deposits, click here to visit the FDIC website or call the agency at 866-806-5919.

2. If your bank is taken over, generally, you do NOT have to fill out any paperwork for the FDIC to transfer over your account to their protection.

3. In a bank failure the FDIC usually restricts access to your money for a few days, although ATM withdrawals usually remain available. IndyMac depositors resumed online banking today, as well as being able to wire money and get into their safe deposit boxes.

4. If you have a loan from a failed bank that is taken over by the FDIC your loan terms will remain the same. Make your loan payments to the same address – and be sure they are on time! Only if the FDIC notifies you of a change of address should you send payments somewhere else. This is particularly important to remember because many scams are perpetrated at the time of the failure.

5. Your savings accounts and CDs will continue to earn interest, but the FDIC reserves the right to change the interest rate.

We'll continue to watch the banking situation and help you make the smartest moves for your money. In fact, the IndyMac failure along with the government's efforts to stabilize Fannie Mae and Freddie Mac impact all of us. We'll explain it all to you in an article we're just finishing up. Look for it in the coming days here on Dolans.com.