Switching Banks? How to Choose the Right One

For consumers hit by the recession, pinching every penny has become a necessity. Getting the best value for your dollar is important, and that includes the amenities offered by your bank. For those who are unhappy with their current financial institution, the process of shopping around for a new bank can be difficult. However, there are some things that you can do to make sure that your money is safe—and that more of it remains in your pocket.

The first thing to look for in a new bank is FDIC insurance. The Federal Deposit Insurance Corporation ensures that you get your money should a bank fail. Checking accounts, savings accounts, and some other accounts and financial products are protected, until the end of this year, for up to $250,000 per account. After December 31, though, protection reverts to the regular $100,000 per account. Realize that investment accounts are not covered by FDIC insurance. If you open certain funds or purchase securities through your bank, you are not protected from those losses.

There are other important considerations as well. Bill Pratt is the author of The Graduate’s Guide to Life and Money. He holds an MBA, worked in the financial services industry and served as an economist for the U.S. government. While Pratt recommends credit unions over banks, he understands that, in some cases, a credit union may not be practical. Pratt offers these suggestions for choosing the right bank:

• Choose a bank that has ATMs available in areas convenient to you, in order to avoid high ATM charges. When you use other banks’ ATMs, you are often charged fees from the bank you use and from your own bank. “Sometimes,” Pratt says, “you could pay as much as $7 just to get your own money.” Instead, look for a bank that refunds ATM fees.
• If you travel frequently, look for a national or regional bank that has plenty of branch locations and ATMS in the areas you visit most often.
• Unless you have a lot of savings available, avoid banks that require a minimum balance in your checking accounts. “You could pay $3 to $15 per month if your balance drops below the required minimum,” Pratt cautions.
• Consider a bank with extended branch hours, including staying open in the evenings or doing business on the weekend. That way, you won’t be rushed to try and get your banking done during a work break.