5 Crafty Ways to Spy on Your Bank

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  • Is your bank an FDIC member?

    Hands down, the most important thing you can do to mitigate the risk of your bank going under is to ensure it's a member of the FDIC, says Marcy Schwab, vice president of retail banking at Sallie Mae, the student lending firm based in Newark, Del.

    "Let's put it this way, when IndyMac failed (in 2008), the customers got their money back because it was insured," she says.

    Chances are, most banks you encounter will be FDIC members, and they'll likely display that membership with FDIC seals throughout the bank. But to be safe, it's a good idea to check with the FDIC website.

    As a general rule, each depositor is insured for up to $250,000 per bank. If you have more money to deposit, it's a good idea to diversify and find an additional bank.

  • Check your bank's ratings

    Private ratings services like Bankrate's Safe & Sound, BauerFinancial and LACE Financial (now part of Kroll Bond Ratings) are good resources for gauging a bank's health. But while their ratings might look different, they're all based on the same data reported to the FDIC, says Gene Kirsch, a senior banking analyst with Weiss Ratings in Jupiter, Fla.

    The data reflect the strength of the bank's capitalization, its asset quality, profitability, liquidity (the bank's ability to raise cash) and stability (strength over multiple quarters).

    "You shouldn't see wildly different results, but it's certainly possible for a bank to receive a 'B' rating from one agency and get an 'A' from another, because we all use different economic models that weigh risk differently," says Kirsch. "The best advice is to use multiple ratings, but only after you've vetted several banks for issues like FDIC membership, convenience, fees, etc."

    The price for accessing ratings can spike into the hundreds of dollars. But basic grades, which provide little analysis, are often free, and they're usually enough for most consumers. "It only makes sense to pay if you're an investor or if you're using the bank for your small business," says Kirsch.

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    Bankrate.com is the Web's leading aggregator of information on financial products including mortgages, credit cards, new and used automobile loans, money market accounts, certificates of deposit, checking and ATM fees, home equity loans and online banking fees. Visit Bankrate.com to get the tools and information that can help you make the best financial decisions.