Bank safety check
November 20, 2009 by Jennifer Chait
Filed under finances, financial matters
If you’re shopping around for a new bank or credit union, you should take a few minutes to research your choices at Bankrate. Bankrate offers a Safe & Sound rating service that looks at the relative financial strength and stability of U.S. commercial banks, savings institutions and credit unions. The Bankrate system applies 22 tests to each institution to measure the following…
- Capital adequacy.
- Asset quality.
- Profitability.
- Liquidity.
Of course you shouldn’t rely on one system when choosing a bank. You should actually head into the nearest branch, look around, talk to some folks, and so on, but getting a basic overview of a bank’s financial health is a good kick-off point.
The site is easy to use and when I filled in the name of a bank it didn’t do anything lame like say, “After you give us your email you can see the rating” I saw it right away. Nice. Plus they make the ratings easy to understand, using a basic star system (shown above).
According to Bankrate, the ratings, “Are comparisons to both industry peer norms and standards. In a very small number of instances, operating strategies that differ from industry norms may lead to ratings that are not truly reflective of an institutions’ financial condition. A Safe & Sound rating of one or two stars does not suggest that we believe direct regulatory action is imminent or even likely but rather only indicates that certain below-average performance factors have been found during the applicable rating cycle. Quarterly updates of Safe & Sound ratings allow us to monitor changes that may occur, and ratings may fluctuate on a quarterly basis.”
So if your bank has lost one too many checks or the tellers have zapped the last of your strength and you’re looking for a new bank, head to the Safe & Sound rating service to see how other banks stack up.
[image via Bankrate]
