When a bank fails, there are systems in place to protect consumers’ deposits and ensure that consumers don’t lose money. As long as your money is in an FDIC-insured institution, it’s safe, even if your bank ceases to operate. Bank failures are incredibly rare.
Keep reading; we’ll explain what a bank failure is, why banks fail, how to spot the signs of a bank failure, the history of bank failures in the United States, and the steps to take in the unlikely event that your bank fails.
- Up to $400 Bonus Tiered Disclosure
New and existing Checking and Savings members who have not previously enrolled in Direct Deposit with SoFi are eligible to earn a cash bonus of either $50 (with at least $1,000 total Eligible Direct Deposits received within 25 calendar days of your first Eligible Direct Deposit of $1 or more) OR $400 (with at least $5,000 total Eligible Direct Deposits received within 25 calendar days of your first Eligible Direct Deposit of $1 or more). Cash bonus amount will be based on the total amount of Eligible Direct Deposit received within 25 calendar days of your first Eligible Direct Deposit of $1 or more. If you have satisfied the Eligible Direct Deposit requirements but have not received a cash bonus in your Checking account, please contact us at 855-456-7634 with the details of your Eligible Direct Deposit. Direct Deposit Promotion begins on 5/15/2026 and will be available through 12/31/26. See full bonus and annual percentage yield (APY) terms at sofi.com/banking/checking-offer/
- APY disclosures
Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 5/28/26. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet
- Fee Policy
We do not charge any account, service, or maintenance fees for SoFi Checking and Savings. We do charge transaction fees for outgoing wire transfers, Instant Transfers, and global remittance transfers. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
- Additional FDIC Insurance
SoFi Bank is a member FDIC and does not provide more than $250,000 of FDIC insurance per depositor per legal category of account ownership, as described in the FDIC’s regulations. Any additional FDIC insurance is provided by the SoFi Insured Deposit Program. Deposits may be insured up to $3M through participation in the program. See full terms at SoFi.com/banking/fdic/sidpterms. See list of participating banks at SoFi.com/banking/fdic/participatingbanks.
- ATM Access
We’ve partnered with Allpoint to provide you with ATM access at any of the 55,000+ ATMs within the Allpoint network. You will not be charged a fee when using an in-network ATM, however, third-party fees may be incurred when using out-of-network ATMs. SoFi’s ATM policies are subject to change at our discretion at any time.
- Early Access to Direct Deposit Funds
Early access to direct deposit funds is based on the timing in which we receive notice of impending payment from the Federal Reserve, which is typically up to two days before the scheduled payment date, but may vary.
- Overdraft Coverage
Overdraft Coverage is a feature automatically offered to SoFi Checking and Savings account holders who receive at least $1,000 or more in Eligible Direct Deposits within a rolling 31 calendar day period on a recurring basis. Eligible Direct Deposit is defined on the SoFi Bank Rate Sheet, available at https://www.sofi.com/legal/banking-rate-sheet. Members enrolled in Overdraft Coverage may be covered for up to $50 in negative balances on SoFi Bank debit card purchases only. Overdraft Coverage does not apply to P2P transfers, bill payments, checks, or other non-debit card transactions. Members with a prior history of unpaid negative balances are not eligible for Overdraft Coverage. Eligibility for Overdraft Coverage is determined by SoFi Bank in its sole discretion. Members can check their enrollment status, if eligible, at any time by logging into their account through the SoFi app or on the SoFi website.
- 0.70% Savings APY Boost
Earn up to 3.80% Annual Percentage Yield (APY) on SoFi Savings with a 0.70% APY Boost (added to the 3.10% APY) for up to 6 months. Open a new SoFi Checking & Savings account with Eligible Direct Deposit by 12/31/26. Rates variable, subject to change. Terms apply at sofi.com/banking#2. SoFi Bank, N.A. Member FDIC.
- Earn up to 3.80% APY8
- Limited Time Offer – New accounts earn a 0.70% APY boost to 3.80% for up to 6 months with eligible direct deposit8
- $0 minimum balance to earn APY
- Earn $50 or $400 when you sign up and set up eligible direct deposit1
- Open Checking & Savings Accts with 1 Sign Up
- Up to 2-Day-Early Paycheck3
- FDIC Insured up to $250k plus up to $3M in supplemental insurance4
Barclays Tiered Savings Annual Percentage Yields (APYs) are accurate as of 06/24/2026. Rates may change at any time without prior notice, before or after the account is opened. The same rate may apply to multiple Tiers and Tiers may change without notice. APY earned is based on the Tier in which your end of day account balance falls. Please see Barclays Tiered Savings for current Tier and APY information.
- Earn 3.65% APY* with Barclays1 Tiered Savings
- $0 min. balance to earn APY
- No monthly maintenance fees
- Easy direct deposits & online transfers
- Deposits are FDIC Insured
ANNUAL PERCENTAGE YIELD (APY): All APYs are accurate as of 6/16/2026.
APYs are subject to change at any time without notice. Offers apply to personal non-IRA accounts only. Charges for specific services may reduce earnings. For High Yield Savings Accounts, the rate may change after the account is opened. For CD accounts, a penalty may be imposed for early withdrawals. After maturity, if your CD rolls over, you will earn the offered rate of interest for your CD type in effect at that time. See all non-IRA CD rates and terms offered here.
NATIONAL AVERAGE: National Average APYs are based on specific product types of top 50 U.S. banks (ranked by total deposits) provided by Curinos LLC through 05/01/2026. High Yield Savings Rates: Average APYs are based on High Yield Savings Accounts of $10,000. Curinos data is obtained from public sources; accuracy and completeness is not guaranteed. Curinos is not liable for reliance on the data.
FDIC INSURANCE: up to $250,000 per depositor, per insured bank, for each ownership category.
- Earn up to 3.30% APY*
- Open a High Yield Savings Account without a minimum deposit
- Competitive rates, no required minimum balances, and no monthly fees
- The Synchrony app makes it a snap to bank anywhere
- Member FDIC
Advertised annual percentage yield (APY) is for new accounts only and is accurate as of June 16, 2026. APY tiers apply to the following balances:
- 4.01% APY on balances of $0.01 – $999.99
- 4.01% APY on balances of $1,000.00 – $49,999.99
- 4.01% APY on balances of $50,000.00 – $499,999.99
- 3.14% APY on balances of $500,000.00 – $999,999.99
- 3.14% APY on balances of $1,000,000.00 & Above
This is a variable-rate account, and APY is subject to change at any time without notice. Limit of one Envision High Yield Savings account per customer. Minimum amount to open is $100, with opening funds subject to a 5-business day hold. Fees may reduce earnings on account.
- Earn up to 4.01% APY
- No monthly maintenance fees
- Open an account with as little as $100
- Open an account in as little as 5 minutes
- Backed by the financial strength of Idaho First Bank
Platinum Savings is a tiered interest rate account. Interest is paid on the entire account balance based on the interest rate and APY in effect that day for the balance tier associated with the end-of-day account balance. *APYs — Annual Percentage Yields are accurate as of January 9, 2026: 0.25% APY on balances of $0.01 to $4,999.99; 3.75% APY on balances of $5,000.00 or more. Interest Rates for the Platinum Savings account are variable and may change at any time without notice. The minimum to open a Platinum Savings account is $100.
Platinum Savings APY Boost Promotion Terms and Conditions
This is a limited time offer available to New and Existing customers who meet the Platinum Savings APY Boost promotion criteria.
Accounts enrolled in the Platinum Savings Annual Percentage Yield (APY) Boost promotion will receive a 0.35% APY boost on the Platinum Savings current standard APY tiers for 6 months following the opening of a new account or when an existing Platinum Savings account is enrolled in the promotion. The Platinum Savings APY boost will be applied on account balances up to $9,999,999.00. Account balances above $9,999,999.00 will earn the standard APY. If the standard-published APY should change during the promotion period, the APY boost will move with it, offering an account APY above the standard rate.
The Promotion begins on February 13, 2026, and ends August 31, 2026. Customers enrolled in the promotion prior to the end date will receive the APY boost for the 6-month period outlined in the terms and conditions.
The promotion can end at any time without notice.
New CIT Bank Customers: This Platinum Savings APY Boost promotion offer is valid for New CIT Bank customers, who, at account opening, do not have a valid CIT Bank User ID (a “New Customer”) or any open CIT Bank accounts provided that the following requirements are met:
New customers must open a Platinum Savings account with a valid Promo Code, CITBoost. The Platinum Savings APY Boost Promo Code will appear on the online account opening enrollment web page.. The Promo Code must be used at the time of account opening. Accounts opened during the program period without the Promo Code are ineligible to receive the APY boost.
The enrolled Platinum Savings account must be open to receive the APY boost during the promotional period.
CIT Bank Customers with an account prior to the promotion: This Platinum Savings APY Boost promotion is valid for a Primary account owner with an existing account with a CIT Bank User ID before the start of the promotion, provided that the following requirements are met:
Customers without a Platinum Savings account open prior to the Promotion must open a new Platinum Savings account via the enrollment web page using Promo Code CITBoost.
Customers with a Platinum Savings account opened prior to the promotion may enroll their current Platinum Savings account into the Platinum Savings Boost promotion via the enrollment web page using Promo Code CITBoost.
Customers who are not the Primary account owner on a Platinum Savings account may open a new Platinum Savings account as the primary account owner via the enrollment web page using Promo Code CITBoost.
Accounts opened or enrolled during the program period without the Promo Code are ineligible to receive the APY boost.
There is a limit of one Platinum Savings APY Boost promotional offer per account and per Primary customer. If multiple Platinum Savings accounts are opened, only one account per primary account owner is eligible.
There is no minimum account balance requirement to participate in the Platinum Savings APY Boost promotion.
Additional Important Terms
The Platinum Savings APY Boost promotion may not be combined with other promotions.
Customers are ineligible to participate in the Platinum Savings APY Boost promotion if:
They are earning an APY over the standard rate.
They participated in a cash bonus promotion in the past 6 months.
Custodial accounts and accounts in the name of a Trust are not eligible.
This offer is non-transferable.
The value of Platinum Saving Boost will be reported as interest income on IRS Form 1099-INT for the calendar year in which it was paid. The recipient is responsible for any applicable taxes.
- Earn 4.10% APY* with CIT’s Savings Connect Account
- $100 minimum balance for APY
- No account opening or monthly service fees
- Deposit checks online with the CIT Bank mobile app
- FDIC Insured
What is a bank failure?
A bank failure is when a federal or state banking regulatory agency closes a bank because the bank is insolvent or has reached illiquidity. Insolvency is when a bank has more debts than assets, and illiquidity is when a bank doesn’t have enough money available to meet customers’ withdrawal requests.
To protect consumers, President Franklin Roosevelt signed the Banking Act in 1933, which created the Federal Deposit Insurance Corporation (FDIC). The FDIC steps in when banks reach the point of collapse and protects customers’ assets by returning them to the customer or moving them to a different banking institution.
Why do banks fail?
The Federal Reserve Bank of New York recently created a panel explaining the most common reasons for bank failures:
- Rising asset losses: Banks make money by investing in assets, but if the assets lose value, this can cause banks to fail.
- Deteriorating solvency: Solvency is when a bank has more assets than liabilities. When a bank experiences the reverse, it means it would be unable to give all customers their money if they all requested it at once.
- Weak fundamentals: The Federal Reserve Bank said that weak fundamentals are the basis for most bank failures. This covers a range of issues like risky investments, poor management, lack of investing diversity, fraud, or having uninsured deposits. For example, 85% of Silicon Valley Bank’s deposits were not insured.
Signs of potential bank failure
Financial experts from Florida Atlantic University report that many banks show warning signs before a bank failure. Here are some examples of these risk factors:
- Negative news reports about a bank’s financial troubles can trigger a bank run, which is when a large number of a bank’s customers withdraw their money due to concerns the bank is failing.
- When banks have investment losses greater than their assets, that’s a red flag.
- Rising interest rates can negatively affect banks, especially those that sold bonds when interest rates were much lower.
- Large bank withdrawals can indicate that customers don’t believe a particular bank is safe.
- Bank stocks dropping could also be an indicator of overall financial instability.
Finally, banks have credit profiles, much like consumers do. If agencies, like Moody’s and Fitch, downgrade their ratings of banks, it could be a sign of potential trouble. Just one of these indicators doesn’t necessarily mean a bank will fail. However, a combination of them or prolonged periods of bank instability can cause a bank failure.
What happens when a bank fails?
Here is what happens when a bank fails, step by step:
- The FDIC takes over. The FDIC takes control of the assets of a failed bank and seeks to sell them to healthy financial institutions. In fact, the FDIC may begin selling a failing bank’s assets even before it officially fails.
- The FDIC notifies and reimburses customers. If a customer had assets under the $250,000 FDIC insurance threshold, the FDIC will either reimburse customers or move customers’ deposits to a healthy bank. The FDIC will notify customers of the status of their deposits.
- The FDIC sells bank assets. Customers with deposits above the FDIC insurance threshold must wait for the FDIC to sell off more bank assets. It’s possible, but not guaranteed, that these customers can recover some of their funds.
- Customers set up new accounts. Customers who received checks can deposit their money at a different bank. Customers who have been assigned a new bank will need to set up accounts and usernames with their new financial institution. This includes setting up new automatic payments for outstanding loans.
What happens to your money when a bank fails?
If you’re a customer of a bank that fails, what happens to your money depends on whether the bank was FDIC-insured and how much money you had in the bank. If your bank was FDIC-insured and you had under the FDIC threshold, your money is safe. The FDIC will return it to you or transfer it to a healthy bank.
Assets above $250,000
FDIC covers $250,000 for an individually owned account and $500,000 for a jointly owned account. If you had assets in the bank above those thresholds, those funds are uninsured. It’s still possible to recover them, but the FDIC prioritizes insured deposits first. Once insured deposits go out, then the FDIC moves on to uninsured deposits, general creditors, and stockholders.
The FDIC says it could take several years to recover assets from failed banks, and reimbursement is not guaranteed for uninsured losses.
Safe deposit boxes
The FDIC does not insure items you keep in safe deposit boxes at a bank. If you store valuables there, like jewelry, consider getting a separate insurance policy. How quickly you can access your safe deposit contents after a bank failure depends on how quickly another institution takes over your bank.
Loans
If you have a loan with a bank that fails, you are still responsible for paying the loan. You will get a notice from a new lender explaining how to continue paying the loan. The FDIC says that selling your loan to a different bank doesn’t affect the terms. In other words, your loan will still have the same interest rate, monthly payment, and length as it did with your original lender.
Examples of bank failures
According to the Pew Research Center, there was an average of 3.6 bank failures per year between 2015 and 2022, and there are just under 4,000 FDIC-insured banks in the United States. That’s a sharp contrast to the average of 635 banks that failed each year between 1921 to 1929 and a decline from the average of 5.3 banks that failed between 1941 and 1979.
The largest bank failure in U.S. history happened in 2008 during the financial crisis. Washington Mutual, which had $300 billion in assets, failed due to the subprime mortgage crisis. The FDIC stepped in, and JPMorgan Chase acquired Washington Mutual Bank’s assets and deposits.
There were relatively few bank failures following Washington Mutual’s closure; however, in 2023, several banks did fail, including Signature Bank in New York, Silicon Valley Bank in California, and First Republic Bank in California. In all three instances, the FDIC stepped in, protected customers’ deposits, and other banks acquired the failed bank’s assets.
What to do if your bank fails
If your bank fails, try your best not to panic. If it’s an FDIC-insured bank, your money is safe, as long as you’re under the insurance threshold. As a first step, confirm your bank’s failure by going to the FDIC Failed Bank List, which maintains the official list of confirmed bank failures. Then, wait for FDIC instructions.
The FDIC will inform you about the next steps quickly. You’ll get information about whether your deposits are going to a new institution or whether you’ll receive a check in the mail. Monitor your accounts closely and avoid attempting to withdraw money, as this can complicate the process. If you have automatic payments withdrawing, stop them or redirect them to another account.
You should be able to access your money again in as little as one business day. If you have further questions, contact the FDIC customer service line at 1-877-ASKFDIC (1-877-275-3342).
How to protect yourself against bank failures
The most important step to take to protect yourself against bank failures in the future is to choose an FDIC-insured bank. Then, make sure not to exceed $250,000 in deposits in each FDIC ownership category.
If you have more than $250,000 to deposit in an ownership category, spread out your money across multiple FDIC-insured banks. That way, if one bank fails, you still have access to your money until the FDIC steps in and either returns your deposits or redirects them to a new account at a different bank.
Remember that opening an additional account at the same institution with the same ownership titling and transferring the excess to the new account will not increase FDIC coverage. It needs to be at a different bank.
It’s important to bank with institutions that have FDIC insurance. For money market funds held in investment accounts, Securities Investor Protection Corporation (SIPC) coverage is important. When appropriate, I recommend retitling accounts or diversifying your cash and cash-equivalent holdings across multiple financial institutions to maximize protection.
It’s also a good idea to stay on top of the latest financial news, so you’re among the first to hear if one of your banks is heading towards collapse. If you have any questions or are still uncertain about keeping your money safe in the event of a bank failure, you can use a service like Money Pickle to schedule a free financial advising session, no strings attached.
Related articles
About our contributors
-
Written by Catherine CollinsCatherine Collins is a personal finance writer and author with more than 10 years of experience writing for top personal finance publications. As a mother to boy/girl twins, she is passionate about helping women and children learn about money and entrepreneurship. Cat is also the co-host of the Five Year You podcast.
-
Edited by Amanda HankelAmanda Hankel is a managing editor at LendEDU. She has more than seven years of experience covering various finance-related topics and has worked for more than 15 years overall in writing, editing, and publishing.
-
Reviewed by Erin Kinkade, CFP®Erin Kinkade, CFP®, ChFC®, works as a financial planner at AAFMAA Wealth Management & Trust. Erin prepares comprehensive financial plans for military veterans and their families.