It looks like credit unions are taking advantage of an influx of new customers to shore up their balance sheets. Bankrate's latest Safe & Sound Star Ratings show more credit unions getting the highest possible five-star ratings.
Banks and thrifts also showed improvement overall, but fewer got the highest possible rating, according to Greg McBride, Bankrate's senior financial analyst.
"In the 3rd quarter Safe & Sound ratings, there was net improvement in credit unions with a gravitation to the 4- and 5-star bands -- the two highest on the rating scale," McBride says. "Commercial bank and thrift ratings improved, but are consolidating in the middle of the scoring band, with fewer institutions rated 5-stars."
If you're in the market for a bank, or just concerned with the safety and soundness of the bank holding your accounts, you might want to take advantage of the ratings, which, as McBride mentioned now are updated to reflect banks' third quarter financial statements.
The ratings take into account the performance of a bank's assets, its profitability, liquidity and other factors.
Unless you're foolish enough to keep your cash with a non-FDIC-insured institution, or you've got more than $250,000 in an account, you're protected by FDIC insurance in the event of a bank going under. But that doesn't mean bank failures are completely painless. As we've talked about before in this space, a bank failure, which often leads to a buyout, usually means you're saddled with an account with less-favorable terms.
Banking with a sound institution means you're more likely to get the terms and products you signed up for and avoid service disruptions.