Ask Dr. Don By Don Taylor, Ph.D., CFA • Bankrate.com

Bank ratings

Dear Dr. Don,
The Zions First National Bank rating in "Research Your Bank" has dropped. The CAEL went from 2 to 3, and the star rating went from 4 to 3 stars. Does this mean the bank is not safe? The money rate is attractive.
Mike Moneymarket

Dear Mike,
A Bankrate Safe & Sound CAEL rating is based on the financial institutions' Capitalization, Asset quality, Earnings and Liquidity.

When a bank is downgraded from a 2 rating to a 3 rating, it has experienced a reduction in one or more of these factors. A performing rating, which is what a CAEL rating of 3 represents, means that the bank still meets the standards set for these factors. This table shows the difference between the rankings. Bankrate can also provide you with a financial memorandum along with the latest financial statements to help you research Zions' financial health.

When you start chasing yield, it's the deposit insurance that provides the safety net for your money if the financial institution should fail. That's why it's important to understand insurance limits when making deposits. Bankrate's savings basics explain the FDIC limitations and how you can manage your accounts to maximize your insurance coverage.

I'd want the bank to maintain a higher rating for uninsured deposits, but I would be able to sleep nights if I had money on deposit in a bank with a CAEL rating of 3, providing that the deposit were FDIC insured. You should be able to too!

-- Posted: March 1, 2002