Despite the sour economy, consumers are still active in the bank market, and many are looking to change banks to cut a better deal on things like checking account rates or lower fees. If you are in the market for a new bank, stop and check these tips first before proceeding any further.
The good news is that there about 8,300 banks in the U.S. to choose from, according to Reuters. Each bank is FDIC-insured, meaning your deposits up to $250,000 in each bank are insured by the U.S. government.
There’s also no shortage of data to review on U.S. banks, especially the larger ones. But, by and large, your best bet is to conduct your own research and kick your own tires before choosing a new bank.
Here are some tips to get your bank mojo rolling:
Safety first. Job one is to ensure that the money you deposit into a bank is safe and protected. That usually means checking to see if your bank is FDIC-insured. That’s easy enough, just ask the bank or check its website. But not all accounts are the same, and you’ll need to check to make sure any account you're considering is covered. For example, not all retirement accounts are covered by the FDIC. To be sure, check with the FDIC to see what is covered and what is not covered when it comes to bank accounts.
Check out online banking. We live in the information age right now, where online services are as much a commodity as tennis rackets or titanium. For ease of use, lower fees and potentially higher bank rates, make sure to include online banks in your due diligence. Granted, it’s a big market and there is much to review. Cut your search time by reviewing the New York Federal Reserve’s guide on online banking. Also check out this article on BankingMyWay.
It’s OK to rate shop, but know the restrictions. If you’re a rate shopper (and who isn’t these days?) make sure to check out the websites of any banks you’re considering and see what kinds of rates they offer on things like savings, checking and certificate of deposit accounts. But also stay long enough to read the fine print. If you pull money out of your CD early, for instance, there are varying degrees of financial pain involved. To find out the best rates available in your area, visit BankingMyWay’s Rate Search Engine.
Watch out for “teaser” rates. Banks just love to snare new customers with high “teaser” interest rates. In general, teaser rates only last for three months or so — after that you get the same interest rate that everyone else does, and it’s going to be lower than the teaser rate.
Shopping for a new bank needn’t be the financial equivalent of root canal. Just use some common sense, do your research and follow the tips above before making a big decision.
—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at BankingMyWay.com.