What happens to credit card debt if a bank fails?

[tylerdee]

Interesting story about what happens to your credit card debt if your bank fails.

Covers Washington Mutual, Wachovia Bank and IndyMac Bank and Lehman Brothers.
One good point is that most acquirers typically honor the contracts made by the failed bank.

Source: CreditCards.com

[amdezurik]

1. you will still be liable for it

some recovery "service" will buy it and then dun you until you die. hey, it's the modern form of debtors prison...

[tylerdee]

2. Agree...but what about bank cd's?

Credit cards and loans would be bank assets and would then be sold or taken over by a trustee. You would still owe your balance, but it would convert to a closed-end loan.

What about bank CD's?

[hertopos]

3. Insured up to 100k

Beyond that, you lose. Don't ever have CD of more than 100k at one bank.
This limit is par bank. You can have as many banks as you need to get enough CD.

BTW, CD is one of the worst form of saving.

Hertopos

[AllieB]

4. Is it 100K per bank, or per account?

I heard that it was per account, so you could have money up to 100K in several CDs, for example, and they would be insured.

[Art_from_Ark]

6. Maybe you should qualify your statement

Japanese CDs are one of the worst forms of investment, especially foreign currency CDs where you will be lucky if you can get back your original investment. Yen-denominated CDs aren't so hot, either, but they can be cashed in at any time and if you hold them to maturity, you might be able to buy a nice dinner with the interest from a $20,000 investment.

However, I had some US CDs at one time that paid 7-8% interest, and were insured to boot. They were a great little money-maker, while they lasted. It was really nice to get that interest check every month. Much better than buying Enron, WorldCom, Sunbeam, Lehman Brothers, GM, Ford, or any number of less publicized klunker stocks at their peaks and watching them go down in flames.

[Xenotime]

5. Ha! thats if they can find me.