checking

Is your bank safe? Check the bank ratings

Before the Great Recession, many people hardly gave a second thought about the safety of their money in banks. But after the bank failures of the past few years, the question looms large in many people's minds: Is my bank safe? That is, is it financially stable enough to handle deposits and withdrawals? One way to find out the health of a bank is to check its bank ratings.

What are bank ratings?

While the Federal Deposit Insurance Corp., or FDIC, provides a wealth of information about banks, including a discouragingly long list of failed banks, it doesn't release its internal bank ratings to the general public. However, it is shared with federal regulators and bank management.

Private companies do release bank ratings based on a particular company's variation of "Camels" factors, an acronym used by the FDIC to calculate capital adequacy, asset quality, management quality, earnings, liquidity and sensitivity to market risk. Some of these reports are offered free online; others are through a paid subscription.

Are bank ratings enough?

Checking on your bank's ratings is a good start, but to make a sound decision about which bank to do business with, you will need to consider other factors as well:

FDIC-insured. If an FDIC-insured bank goes belly up, you won't lose your life savings. FDIC-insured financial institutions protect your deposits of up to $250,000. The insurance covers certificates of deposit, or CDs, savings accounts, checking accounts and other deposit accounts.
Good interest rates. Find out not only the best interest rate, but also how your bank compounds interest.
Low fees. Some financial institutions charge account maintenance fee no matter what the balance, ATM fees, lost debit/ATM card fees, check-printing fees, even coin-counting fees. Read the fine print and ask.

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