Private ratings services like Bankrate's Safe & Sound, BauerFinancial and LACE Financial (now part of Kroll Bond Ratings) are good resources for gauging a bank's health. But while their ratings might look different, they're all based on the same data reported to the FDIC, says Gene Kirsch, a senior banking analyst with Weiss Ratings in Jupiter, Fla.
The data reflect the strength of the bank's capitalization, its asset quality, profitability, liquidity (the bank's ability to raise cash) and stability (strength over multiple quarters).
"You shouldn't see wildly different results, but it's certainly possible for a bank to receive a 'B' rating from one agency and get an 'A' from another, because we all use different economic models that weigh risk differently," says Kirsch. "The best advice is to use multiple ratings, but only after you've vetted several banks for issues like FDIC membership, convenience, fees, etc."
The price for accessing ratings can spike into the hundreds of dollars. But basic grades, which provide little analysis, are often free, and they're usually enough for most consumers. "It only makes sense to pay if you're an investor or if you're using the bank for your small business," says Kirsch.