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I was riding with a good friend when I asked her to pull over at the bank so I could use the ATM.
“No,” she said. “I’m not going to Wells Fargo, and neither should you. It’s time you got a new bank.”
She had a point. Wells Fargo was fined $190 million last year after federal regulators said bank employees opened accounts in customers’ names — without the customers’ knowledge.
No one opened a phony account in my name (to my knowledge). I had been a happy Wells Fargo customer for years. But we can’t complain about companies engaged in shady practices if we keep doing business with them. So, I explored leaving the bank.
Fraud is just one reason to shop for a new bank. Overdraft fees and difficulty resolving disputes, opening accounts and accessing money top the list of complaints that the Consumer Financial Protection Bureau regularly gets about banks.
If you are shopping for a better bank or considering doing so, the following tips will aid you. Once you’re ready to make a jump, be sure to check out “5 Simple Steps to Painlessly Switch Banks.”
1. Compare interest rates
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If you’ve got money sitting in a savings account, CD or money market account, you’d be remiss not to shop for the best interest rate.
For years, interest on deposits was so low it was hardly worth asking the annual percentage yield. Now, though, you can find APYs of up to 1 percent or even a bit more on savings accounts. You can even find interest-earning checking accounts.
One place to compare interest rates on CDs and checking and savings accounts: the Money Talks News Solutions Center.
2. Make sure an institution is insured
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Before switching to a new credit union or bank, confirm that it is insured by the Federal Deposit Insurance Corp.
This independent federal government agency insures that if a member banking institution fails, each depositor — you or I — gets our money back up to at least $250,000 per insured bank.
Use the FDIC’s “BankFind” tool to check whether institutions you are considering are FDIC members.
3. Consider an online bank
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There’s a lot to like about banks that do business solely online. They don’t need to maintain a network of brick-and-mortar branches, so their expenses are lower, which can mean they pay higher interest rates and charge lower fees.
Here’s a possible issue, however: Online banks generally don’t have their own ATMs. They rely on agreements with banking networks. So, note an online bank’s ATM policies and costs before switching banks. Better yet, find an internet bank that waives or reimburses you for any ATM fees you might incur.
4. Explore credit unions
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Credit unions may offer the personal service you crave with the lower fees and higher interest rates you need. Also, they have a reputation for focusing on fair lending and investing in communities.
Just don’t assume you’re getting a good deal without comparing accounts you qualify for at a variety of institutions. For more pointers, check out “How to Pick the Best Credit Union for You.”