by David Spader
Millions of Americans move house every year, and that frequently means finding a new bank/credit union. The problem of finding a good bank has been more difficult since the Great Recession started in late 2007. The federal government has shut down hundreds of insolvent banks since that time, and continues to do so. Here are some things to look for when choosing a bank or credit union.
The most important thing is FDIC insurance, should the bank become insolvent. The FDIC has always paid insured account holders within 30 days of seizing a bank. State chartered banks and credit unions may or may not be insured. Ask before you open an account.
Fees can add up to a small fortune very quickly if the bank charges for every little service. Look for banks that offer free checking, free checks, no minimum balance and no fee for using a teller inside the bank. Especially check into their ATM fees. Some banks tack on a surcharge for using an ATM outside of their network, and this is in addition to the fee paid at the ATM. Additionally, some banks charge to mail a paper statement or photocopies of your canceled checks.
Savings interest rates are at historic lows, hovering at around one percent. Credit unions usually offer a higher interest rate than banks. Find the best interest rate for the amount of money you plan to invest, but make sure that you can do without the money for the required period of time. For example, you may earn two percent higher interest on a five-year certificate of deposit, but there will be significant penalties if you need the money before maturity.
Lending policies are another thing to look for when choosing a bank or credit union. If you plan to buy a home, then you want a bank that makes the mortgage process easy and without excessive loan origination costs. If you have slightly damaged credit, which is common with the current economy, then choose a bank or credit union that services this type of customer.
Make sure that the bank or credit union offers the services you need, such as a safe deposit box, online banking and bill pay, the ability to transfer money from one account to another over the phone, and overdraft protection. Also, if you are paid through direct deposit, ask the bank if they allow immediate access to the money.
The website, Bankrate.com, lists the health of hundreds of banks and credit unions throughout the country. Use this data to immediately eliminate problem banks and hone in on the healthier ones in your neighborhood.