TIPS ON CHOOSING YOUR BANK - WHAT TO LOOK FOR IN A BANK

Evaluating a bank: What to look for

When looking for a bank that fits your needs, put on your detective hat and get ready to search for the best deals. You don’t want to pick a bank just because that’s where your parents or co-worker banked.

So what do you look for? You first want to look for a bank that participates in the U.S. government–operated Federal Deposit Insurance Corporation (FDIC) program. Otherwise, if the bank fails, your money isn’t protected.

The FDIC covers your deposits at each bank up to a cool quarter million dollars. Some online banks are able to offer higher interest rates because they’re based overseas and, therefore, don’t participate in the FDIC program. (Banks must pay insurance premiums into the FDIC fund, which, of course, adds to a bank’s costs.)

Another risk for you is noncovered banks that take excessive risks with their business to be able to pay depositors higher interest rates.

When considering doing business with an online bank or a smaller bank you haven’t heard of, you should be especially careful to ensure that the bank is covered under the FDIC. And don’t simply accept the bank’s word for it or the bank’s display of the FDIC logo in its offices or on its Web site.

Check the FDIC’s Web site database of FDIC-insured institutions to see whether the bank you’re considering doing business with is covered. Search by going to the FDIC’s “Bank Find” page (www2.fdic.gov/idasp/main_bankfind.asp). You can search by bank name, city, state, or zip code of the bank.

For insured banks, you can see the date it became insured, its insurance certificate number, the main office location for the bank (and branches), its primary government regulator, and other links to detailed information about the bank. In the event that your bank doesn’t appear on the FDIC list yet the bank claims FDIC coverage, contact the FDIC at 877-275-3342.

In addition to ensuring that a bank is covered by the FDIC, also seek answers to these questions:

✓ What’s the bank’s reputation for its services? This may not be easy to discern, but at a minimum, you should conduct an Internet search of the bank’s name along with the word “complaints” or “problems” and examine the results.

✓ How accessible and knowledgeable are customer service people at the bank? You want to be able to talk to a live, helpful person when you need help. Look for a phone number on the bank’s Web site and call it to see how difficult reaching a live person is. Ask the customer service representatives questions to determine how knowledgeable and service oriented they are.

✓ What’s the process and options for withdrawing your money? This issue is important to discuss with the bank’s customer service people because you want convenient, low-cost access to your money. For example, if a bank lacks ATMs, what do they charge you for using other ATMs?

✓ What are the fees for particular services? You can probably find this information on the bank’s Web site in a section called “accounts terms” or “disclosures.” Also, look for the Truth in Savings Disclosure, which answers relevant account questions in a standardized format.