How to choose a bank: instruction
Banks are not much different from car dealerships – both have a product that needs to be advertised and sold. At car dealerships it is a reduction in the cost of cars, at banks – favorable rates on loans and deposits. That is why it is so often possible to see billboards or newspapers, which paint a tempting offer of a deposit at 1% per annum or a loan at a record low rate. However, if such ads cause you an overwhelming desire to immediately run to the said bank, it is worth taking a break and checking – but is this really a good bank? Whether or not the truist bank routing number is original? Won’t it “burst” in a couple of months? What to pay attention to when choosing a bank – we explain as simply as possible.
Check banking license
Familiarizing yourself with a bank should begin with a license check. This step may seem a formality, but neither the website on the Internet, nor even a real office will guarantee that the financial institution really has a banking license.
You can check all this on the website of the U.S. Central Bank – to do this, select the menu item “Check the financial institution” and enter the name of the bank.
However, the name may be different from the full company name, or there will be several banks with similar names. In this case you need to search for the license number: as a rule, it is specified in the sections “About the bank”, “Details” and so on. If the presence of a license on the site of the organization is reported vaguely, without specifying its number, it is reason to be wary.
Check the presence of the bank in the DIA system
The next step is to make sure that the bank you like is a member of the obligatory deposit insurance system (DIS). It is provided by the state corporation Deposit Insurance Agency (DIA). If a financial institution stops operating, your depositors will be paid compensation. The list of participating banks can be found on the DIA website in the “Deposit Insurance” section.
The same section contains “Tips for depositors”, as well as answers to frequent questions: what deposits are insured, how to get compensation and many others.
Find out about a bank’s financial situation
So, you have made sure that you are dealing with an officially registered financial institution, but how do you know how strong its position is? In other words, is the bank likely to go bankrupt soon? To do this, you need to turn to the experience of rating agencies that assess the ability of financial institutions to fulfill their obligations: Moody’s, Fitch Ratings and others. It is enough to type in a search engine, for example, bank rating” to get the information you are interested in.
The agencies assign a rating to a bank ranging from maximum financial strength to default. In addition, the agencies regularly give a forecast. The maximum value, according to international standards, is denoted as AAA, but the lowest value (and from such a bank you should immediately run away) is C. Well, if you see in the rating a bank with a sad letter D next to its name, then this bank is in default, that is almost dead.
There is another way to choose a reliable bank without relying on opinions and ratings: from the list of systemically important banks on the website of the U.S. Central Bank. There are 22 such organizations, accounting for more than 60 percent of the total assets of the U.S. banking sector. The advantage for the depositor is that the government closely monitors the banks that affect the entire financial system. In case of difficulties they can count on support first of all.
Choose the most convenient bank
Gone are the days when the availability of services depended on the location of offices. Today, any bank offers its customers online services. In the forefront is the ability to fully use financial instruments without leaving home, which is especially important in today’s environment. And in some cases we are talking about something more: for example, some banks have a whole ecosystem of various online services, including product delivery or online movie theaters.
A user-friendly main website and a well-developed mobile application define a truly first-class and customer-oriented bank. The app is worth a special mention, because it is literally your “pocket bank”: to understand who offers the best, you need to study the corresponding ratings.
Checking the license and participation in the mandatory deposit insurance system will exclude unscrupulous banks that can go bankrupt with your money. The study of creditworthiness ratings will allow you to understand the positions of which banks are strong.
It is equally important to understand how the bank you like is developing, because it is important not just to keep up with the competition, but to be ahead of the curve, providing access to a wide range of services, including those that go beyond the traditional banking sphere.