What to Do if Your Bank Is Destroyed

We all think of a bank as the safest place for our money. What happens if the bank is destroyed (by natural disaster, an accident, or terrorism)? Hopefully your institution will be prepared for any problems. If not, you can at least put some safeguards in place to minimize the impact.

The Big Picture

First, take a deep breath and hope for the best. The larger and wiser institutions have already imagined some of the worst-case-scenarios. In many cases, you can count on the following:

• Your money is not gone
• You can still login online, write checks, and charge with your debit or credit card
• Your credit won’t be ruined by late payments and snafus

However, it never hurts to be proactive and stay on top of the situation.

Steps to Take

Be proactive. This is the most important thing you can do. Call your bank and/or visit the website. See what news they have for customers like you. You can find out what happened, what the bank is doing, and what you need to do. If you can’t find anybody, try the FDIC (or CUNA for credit unions). If your institution is not FDIC or NCUSIF insured, consider finding a safer one.

Call anybody who's expecting your money. Tell them what happened and that there might be a snafu. If your mortgage comes out of your bank account automatically every month, you should call the mortgage company before there is a problem.

Get liquid -- you need easy access to cash. Don’t mail checks to the bank if you’ll have a hard time getting the money later. If you absolutely have to, try a check-cashing or payday loan service so you can get some cash (but don't make a habit of it). During major disasters, some banks relax the rules and you may be able to cash a check for free at a bank or credit union in the area.

Protect Yourself From Future Banking Disasters

If you’re suffering through a disaster now, you’re probably hoping this will never happen again. Here’s what you can do to make life easier in the event of a future disaster.

Keep multiple accounts. The old wisdom about not having all your eggs in one basket comes to mind. If something bad happens to one bank, your other banks will likely have averted the disaster.

Use a large institution for a portion of your savings. Smaller banks and credit unions are great, but they may take longer to recover. If you have some cash stashed at a large institution it may be easier to get your money quickly. There are a million free checking offers out there. Keep a little cash in one of those accounts and you can thank yourself later.

Link your accounts (read an example). By using online banks and free checking, you can have multiple accounts linked together. This lets you move money electronically from the institution that suffered a disaster to another institution. You don’t have to physically go anywhere or wait for the mail. Remember that money is largely electronic these days – take advantage of that. Your bank may be wiped out, but their website and data could “live” elsewhere so you can still use your money.

Find out about your bank’s preparedness. Ask about their “disaster recovery” plans. Ideally they will have multiple sites that store information and can spring into action if a main site is destroyed.

Monitor your credit. The disaster could have exposed your personal information to identity thieves and other scammers. Be wary of offers you receive following the incident. You should always monitor your credit, but now it’s more important. Use your free credit report from the US government to keep an eye out for suspicious activity.