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What does consolidation mean for you?

Consolidation is a common occurrence in the banking industry — regardless of what’s going on with the economy. If the bank or credit union you’ve been doing business with for years is acquired, it could result in some notable adjustments to what you are used to.

Normally, change to any aspect of people’s finances causes all sorts of stress, but people tend to shrug when it comes to a change in bank ownership.

On some levels, that makes sense. Your money is still insured by the FDIC. You’re still able to access it through the same network of ATMs. And, if you’ve got a mortgage or other long-term loan (or savings certificate) through your old bank, your monthly payments aren’t going to change.

But new banks can mean smaller transitions that might not be immediately obvious. When you get that welcome packet in the mail from your new financial institution, here are six factors to investigate before deciding whether it’s in your best interest to remain a customer.

Minimum-balance fees

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Every bank and credit union has different levels of checking and savings accounts — each with their own minimum balance requirements. It’s important to find out what those are with your new financial institution to avoid being hit with monthly service charges.

“Usually, the takeover bank is bigger,” says Bedda D’Angelo, president of Fiduciary Solutions, a financial planning company based in Durham, N.C. “Bigger banks typically have bigger and more fees.”

Transactions and services

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If you’ve got a safe-deposit box or occasionally pick up money orders or make wire transfers from your bank, learn what the new parent company charges for those services — and, in some cases, if they offer them at all.

If the fees are higher, let the manager know you are considering taking your business elsewhere. New bank owners are typically eager to keep customers, so you can sometimes talk them into waiving fees for at least a short while — especially if you show interest in other services they offer.

Lending rules

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Customers who have typically done business with a community bank could face the biggest shock when their bank is acquired. The process will be different when they want to borrow money or refinance, but the changes will be particularly evident if they need to restructure a loan when cash flow problems hit.

“A community bank is a lot more flexible,” says Paul G. Merski, senior vice president of the Independent Community Bankers of America. “It can restructure the terms of the loan with you. It’s different when you’re dealing with a corporate policy that comes out of New York.”

Interest rates

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While the rate you’re getting for your current CD isn’t going to change, you’ll definitely want to keep a close eye on things when renewal time comes around. Your new savings institution may not be as competitive as your former one, so a change of ownership is a good time to shop around for a better rate.

Of course, it’s wise to examine rates every time a CD is up for renewal, but few people do so. When a bank gets new owners, though, it’s a good reminder that there are other places eager for your business.

Bundled services

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Many banks will offer a bundle of services to customers to entice them to stay once the merger is complete. These are often focused on small business customers, but consumers can often reap the benefits. You’ll have to have a higher balance among accounts to get the premium bundles, but it could ultimately earn you higher interest rates, waivers on select ATM fees and an overdraft line of credit you wouldn’t normally have.

ATM fees

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It’s an oldie, but a goodie. ATM fees vary from bank to bank. Find out how much it will cost you to use a competitor’s cash machine — and if there are ways to have those fees reimbursed with a minimum balance. An extra dollar or three per transaction can add up fast, depending on how often you use the devices.

Additional resources

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Learn more about banking by clicking on the following links.

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