The financial crisis of the last few years has put failing banks in the news. Find out if you need to be concerned about your own bank.
1Understand FDIC Insurance
The first step to securing your financial situation, is by reviewing the bank you are currently doing business with.
The first thing you should know is that if your bank does fail, as long as your money is FDIC insured, you are not at risk of losing your money.
The FDIC insures bank deposits up to $100,000 at participating banks. If you are below $100,000 and your bank is FDIC insured, your money is safe in the unlikely event of a bank failure. You can also increase that limit by having trusts and joint accounts.
2Assess Your Current Bank
Even with the FDIC guarantee, it is still troubling to know that you have your life savings in a bank that is at risk of failing. Because of that, it is a good idea to find out the health of your bank.
The best places to look for an honest, objective appraisal would be at the two most trustworthy free providers of bank ratings out there today:
3Know Your Rights
You have certain rights as a customer, and you should know what they are to ensure they are being honored. The FDIC recently published a Depositor Bill of Rights. This was a recent move to promote public confidence in the banking sector.
The most important components of this Bill of Rights are listed below.
You have the right to:
Be Aware
You should be told any time you are making a deposit if it won't be covered by FDIC insurance for any reason.
Be Insured
You have the right to have your deposits insured at least up to $100,000. This limit can be raised to $250,000 based on criteria like having trust and joint accounts. If you have a large sum of money in any bank, you should check with them to be sure it is all insured by the FCIC.
Prompt Access
You have the right to prompt access to funds in the unlikely event that your bank does actually fail.
4Research Your Bank
If you're interested in finding the financial health of your bank, or if you're looking for a new bank for other reasons, here are some tips on how to do that.
Review the Rating Sites
In order to get yourself an account in one of the safest banks in the US, you should take a look at all of the ratings sites listed in the first section. Make sure you read how each agency's rating system works to assure yourself that you're interpreting the results correctly.
5Review Safe Banking Tips
For some reliable tips on how to go about safe banking, consult Elliott Wave International's report on the 100 Safest Banks in the US.
You can order a free copy of the report.
6Consider the Alternatives
If you are still unsure about your bank, it's important to keep in mind that there are alternatives to traditional banks: thrifts and credit unions. Though you may not necessarily get the higher interest rates on your investment that a bank offers, these alternatives usually entail a lower risk, which many people find appealing in these times of economic hardship.
7Do You Really Need to Find a New Bank?
To summarize, unless you have huge sums of money in the bank, the need to switch banks because of the financial health of the bank is very, very low. In most cases, the worry about this topic has been sensationalized by the media.
In the worst case scenario, if your bank fails, it will be bought out by a bigger bank, it will be handled through the federal bailout plan or you will get your money because it is FDIC insured.
