Can a Bank Lose Your Money? And What to Do If It Happens

While banks and credit unions are generally considered secure places for your funds, understanding the measures in place to protect your deposits and what actions you can take if you suspect an issue is important.

Understanding Deposit Insurance

The primary safeguard for funds held in banks and credit unions is federal deposit insurance. For banks, this protection is provided by the Federal Deposit Insurance Corporation (FDIC), an independent U.S. government agency. The FDIC insures deposits in its member banks.

Similarly, credit unions are protected by the National Credit Union Administration (NCUA) through its National Credit Union Share Insurance Fund (NCUSIF). The NCUA is an independent federal agency that insures member savings in federally insured credit unions. Both the FDIC and NCUA insurance are backed by the full faith and credit of the United States government.

The standard insurance coverage limit for both FDIC and NCUA is $250,000 per depositor, per insured institution, for each account ownership category. This means that if you have multiple accounts at the same bank or credit union under the same ownership category, their combined balance is insured up to $250,000. For example, a single individual with a checking account and a savings account totaling $300,000 at one bank would only have $250,000 insured, leaving $50,000 uninsured.

The coverage extends to various common deposit accounts, including checking accounts, savings accounts, money market deposit accounts (MMDAs), and certificates of deposit (CDs). Official bank instruments such as cashier’s checks and money orders are also covered. Different ownership categories allow for separate insurance coverage up to the $250,000 limit. These categories include single accounts, joint accounts, certain retirement accounts like IRAs, and various trust accounts. For instance, a joint account held by two individuals at an insured institution would be covered up to $500,000, or $250,000 per owner.

Situations Where Funds May Not Be Fully Protected

While deposit insurance offers substantial protection, certain situations can leave funds at risk or outside the scope of this coverage. One such instance is when deposits at a single institution exceed the standard $250,000 limit for a particular ownership category. Funds above this threshold are generally uninsured. Diversifying deposits across multiple insured institutions or utilizing different ownership categories can help maximize coverage.

Another area where funds are not federally insured involves non-deposit investment products offered by banks or credit unions. Products such as mutual funds, stocks, bonds, annuities, and life insurance policies are not covered by FDIC or NCUA insurance, even if purchased through an insured financial institution. These investments carry market risks, and their value can fluctuate. The contents of safe deposit boxes are also not covered by federal deposit insurance.

Fraudulent activity represents a different type of risk where money can appear to be missing. This can include phishing scams, identity theft, or unauthorized transactions. While banks often have systems and policies in place to address fraud, the protection here differs from deposit insurance, which specifically covers bank failures. Banks investigate unauthorized transactions, and consumer liability for such events can vary depending on how quickly the issue is reported.

Processing errors or unexpected fees by the bank can also lead to discrepancies in account balances. These can range from incorrect transaction postings, miskeyed data, or unexpected charges for services. Such errors are administrative in nature and distinct from outright loss due to bank failure or external fraud.

Actions to Take if You Believe Your Money is Missing

If you notice that money appears to be missing from your bank account, the first step is to carefully review your account statements and transaction history. Look for any unfamiliar transactions, processing errors, or unexpected fees that could explain the discrepancy. Gathering relevant details such as dates, amounts, and transaction descriptions will be helpful.

After reviewing your records, immediately contact your bank’s customer service or fraud department. Clearly explain the issue, providing all the details you gathered. Many banks have specialized teams and procedures for investigating missing funds or unauthorized transactions. It is advisable to document all communications, including dates, times, names of representatives you speak with, and any case or reference numbers provided.

If the bank does not resolve the issue to your satisfaction, you can escalate the matter to relevant regulatory bodies. For issues with banks, you can file a complaint with the Consumer Financial Protection Bureau (CFPB) or the FDIC. For credit unions, complaints can be directed to the NCUA. These agencies can investigate your complaint and help ensure the financial institution complies with regulations.