Will Your Bank Survive? Here's How to Check

Billionaire investor Wilbur Ross expects thousands of banks to fail in the coming months, he told CNBC this week. How can you tell if your bank will be one of them?

For one, watch the news. Among major U.S. commercial banks, rumors are swirling that Washington Mutual will go down next. That said, WaMu account holders don’t need to go running to get their money. In all likelihood, another bank will buy WaMu and it will be business as usual, just under a new name. Worst case scenario, the government takes over and the FDIC steps in and repays account holders up to $100,000 each.

If you keep money at a bank that isn’t in the headlines, you can get a sense of whether your money will be safe by looking up bank ratings, such as Bank Rate’s Safe & Sound ratings or Fitch Ratings. What do the ratings measure? In Bankrate’s own words:’s Safe & Sound service is a proprietary system designed to provide information on the relative financial strength and stability of U.S. commercial banks, savings institutions and credit unions. The system employs a series of twenty-two tests to measure the capital adequacy, asset quality, profitability, and liquidity (CAEL) of each rated financial institution.

Put simply, Bankrate assigns bank a score from one (highest) to five (lowest) based upon its own financial health. Banks with ratings of one, two, or three are in pretty good shape. A rating of four or five are cause for concerns.

Here are a few examples of current banks ratings:

  • WaMu: 5 (Lowest Rated)
  • FNBO: 2 (Sound)
  • ING: 3 (Performing)
  • Bank of America: 3 (Performing)
  • E*Trade: 4 (Below Peer Group)

After searching a couple dozen big banks, I didn’t find a single bank with a top rating. That’s probably a sign of the times. While a good rating isn’t necessarily a sign that your bank is 100% safe, it’s a good indicator that it’s better off than most.

If you’re looking for a safe place to stash your savings, I highly recommend the sound-rated FNBO. Not only is the bank financially safe, the FNBO Direct savings account offers one of the nation’s highest interest rates with no minimum deposit. Read my review of FNBO Direct.

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About David Weliver

David Weliver is the founding editor of Money Under 30. He's a cited authority on personal finance and the unique money issues we face during our first two decades as adults. He lives in Maine with his wife and two children.


  1. In Britain, now that the vast majority of adverse lenders have gone, and most of the High Street lenders with a large exposure to BTL have been bought up (HBoS and A&L), I wonder if the spotlight will be turned on the Banks which were the most “lenient” in the mainstream. In that regard I wonder how strong Abbey and RBS are. Time will tell.

  2. I love irony. I read this on the 27th, and the ad on the right is for WaMu Free checking. Whoohoo!

  3. Susan Epperson says:


    You’ve shown some really great insight during these last crazy financial months. (I’ve been lurking on your blog for a while.)

    But, I haven’t seen you reference credit unions at all. They’re not-for-profit financial cooperatives. So that means their investment structure should be focused on giving back to their members…not investing in “risky” investments to please their stockholders.

    I’ve worked for my credit union for over 14 years now. And, I’ve been a credit union member all my life (thanks to my father). I’ll never be super rich from some crazy executive salary, but I can sleep at night knowing that my teammates and our board are doing the right thing for our members.

    I’ve always been envious of the big advertising budgets that banks have had. But, our conservative spending and conservative policies are paying off now. So, I can’t afford the cool tv spots that Wamu had (they were clever). But, my members can know that they’re safe. And they won’t be reading about us, like they’re reading about Wamu now.

    I’m really interested to get your take on credit unions, David. Thanks for taking the time to educate consumers…you’re making a difference!!

    Susan Epperson
    Richmond, VA

  4. Susan, a very belated THANK YOU for your comment! You are very right about credit unions—and you inspired me to write a post about credit unions this week.

    I’ve been a happy member of one for 10 years, and think they’re a great option.