Many workers do not know what to do with savings accounts and checking accounts facilitated by a failed bank, and may lose a lot of money that would have gone towards a more substantial nest egg. With upwards of 150 banks in the country failing this year, and more expected to follow as the economic conditions fail to improve, you have to know what to do in case you have these investments and savings venues with a bank that has folded, or will fold in the near future.

It is standard for the government to take over a failed bank. When this occurs, accounts (which are typically insured to a certain extent) are soon paid out after the institution closes, while purchase of the failed bank by another bank causes the latter to assume the accounts. In this case, accountholders need not worry because insured accounts have never suffered monetary losses, says the Federal Deposit Insurance Corporation. Despite the streamlined takeover process the FDIC established for failed banks, the transition can be problematic for customers. The failure of a bank may not result in lost money, but there are other things its clients need to know and expect. What should they do with their checking accounts and savings accounts, for example?

Checking Accounts and Savings Accounts

Savings accounts and checking accounts are insured to a maximum amount of $ 250,000. That quarter-million insurance coverage extends to failed banks, too. However, account balances over that amount means that the difference is not covered by insurance. If you have more than the insured limit, you may not have any fund access or only have limited access some days after bank closure; at least until FDIC completion of the takeover process. Novantas LLC managing director Kenneth Alverson says that the FDIC does what it can to minimize the incidents of low-level or zero access to funds. The disruption typically happens over the course of one weekend to minimize the impact on disconcerted account holders, so if the old bank closes its doors on Friday, you can expect the takeover of the purchasing bank (and restoration of account access) by Monday.

Customers with checks usually have to request new checks from the purchasing bank, although older debit cards and checks from the closed bank may still be valid for some time. One less problematic concern that account holders may have is that closing the account after the transition of ownership may be more difficult and time-consuming due to additional documentation. This can apply to both types of accounts: savings accounts and checking accounts in a failed bank.

Katherine Smith is an author who specializes in financial topics concerning seniors. Puritan Financial Group gives seniors reliable retirement investments to help them build better nest eggs and advice that can help them decide what to do. For more information on how Puritan Financial Group can help you, please visit our website at