When Should You Switch Banks?
In this uncertain economic climate it can be very tempting to pull your money out of the bank and stuff it under the mattress. Resist this temptation. Most people don't need to switch their banks very often. There are some reasons you might want to consider before making a change:
- Insurance. Find out if your bank is insured with the FDIC. If it is not, you should switch to a bank that is. In our current economic climate it is more important than ever to make sure your bank is protected. The Federal Deposit Insurance Corporation (FDIC) insures deposits at banks and savings and loans. Single Accounts (with one person), Joint Accounts (with two or more persons) and IRAs and other retirement accounts are all insured up to $250,000 per owner. The base limit for savings accounts was temporarily increased from $100,000 to $250,000 per depositor through the end of 2009.
- Bank Health. It is important to research the health of your bank as well. Banks are rated by federal regulators on the health of their investment portfolio and level of risk the bank has assumed. In general, institutions are required to maintain a tangible capital ratio of at least 4% and a total risk-based capital ratio of at least 8%. The rating system also looks at profitability trends, the level of delinquent loans, the market versus book value of the investment portfolio and other historical liquidity data.
- Compare Fees and Service Charges. While the price isn't the only factor is making a decision, comparing fees and service charges will give you a base for starting your decision making process. Typical charges for late fees are $35 and overlimit fees are $30 according to industry sources. Always start with some research online to find the competitive rates in your area before heading out to meet with bank representatives in person.
- Changing Requirements. Another reason to shop around for a new bank might be a change in your requirements. Maybe you are thinking of starting a new business or applying for a new home loan. As your requirements change it is a good idea to shop around and find the going rates are in your area.
Bank fraud may be another reason you would need to switch banks. If you are having trouble resolving identity theft problems, including with bank-issued credit cards, contact the Federal Deposit Insurance Corporation (FDIC) to find the agency with the correct jurisdiction to handle your complaint.