Picking a Bank...

[Hobbery]

Hi there.  According to the news, on December 17, Julian Assange tweeted this:

"Does your business do business with Bank of America?  Our advice is to place your funds somewhere safer." 

If I believe Assange is credible (or at least knows something I don't...) how should I react?

I only have one account.  It's a Bank of America checking account.  If I wanted to open another account somewhere else (and close my Bank of America account), where should I keep what little cash I have...?

Is there a "most ethical bank"...?  Is there a "most simple and sound" place for me to have a checking account? 

I'm a check to check guy.  I only have a few thousand dollars.  I like to have my bills withdrawn electronically.  I know little about banks so thank you for your advice... 

[craigr]

I removed my money from BoA years ago when I read they were opening accounts for illegal aliens. I also think they are way in bed with the US Govt. and get loads of special favors. Try dealing with a small local bank or a credit union. I would also avoid any bank that took bailout funds in 2008. Any bank that needs to be bailed out with federal tax dollars is taking too much risk with your money and doesn't deserve your business either. Most all banks today do electronic checking and bill payment so that shouldn't be a problem.

[foglifter]

I second craigr's suggestion - credit unions and small community banks (or online banks) are the way to go. Another point I hate in big banks is they outsourced IT and customer service overseas which led to a big drop in the quality of service. I personally prefer my (very rare) calls to the bank to be handled promptly and in understandable English by a person who actually can resolve my question and not just "pass it to their manager".

I love credit unions. I use Alliant Credit Union for my cash savings and checking. They pay pretty decent these days 1.35% APY on both checking and savings. Recently they introduced check deposits online using scanner.

I also love Fidelity mySmart Cash account - they have the best bill pay service in my opinion: you can get an electronic bill and they will automatically schedule a monthly minimum payment for you to ensure that the bill is paid in time (taking into account weekends and holidays). Fidelity also offers a free Yodlee-based FullView service - you can see all your banking/investment/loan/credit accounts in one page, even credit card rewards. The money is held in an FDIC-insured bank. If you wish you can buy money-market funds right in your checking account or any other mutual funds/ETFs/stocks (although Fidelity doesn't want you to do that in this type of account). Fidelity automatically reimburses ANY and ALL ATM fees. .

I also keep a 100 bucks in my local CU for those unlikely events when I need to withdraw large amount of cash or buy a cashier check.  

[MeDebtFree]

My spouse, my kids, and I all have our cash/checking accounts with credit unions.

Some are better than others for things like how they calculate/pay their interest but in general they are all better than any large or regional bank that I have seen.  And I like the fact that my deposits get used for credit in my local community (not that a particular bank wouldn't but I know my credit union always does).

Most/all are NCUA insured (equivalent of FDIC for banks) but be sure to double check that yours participates in NCUA.

[Gumby]

I used to have my account with BoA. Now my money is in a small community bank with a solid balance sheet, excellent customer service and no surprise fees. It was definitely worth the move.

Here's a good website (with an inspiring video) that will steer you in the right direction:

 http://moveyourmoney.info

The website has a tool to help compare your local banks and check their financials.

[Jan Van]

...I would also avoid any bank that took bailout funds in 2008....

Craig, this only goes for banks, right? I do want my Iced Coffee and Spicey Chicken Sandwich ($1) from McDonalds sometimes!

I'm still banking at ING Direct. They took over Netbank about three years ago. The whole process went so seamless, I wasn't even aware of it! Until the website changed...

[Gumby]

I'm still banking at ING Direct. They took over Netbank about three years ago. The whole process went so seamless, I wasn't even aware of it! Until the website changed...

Things are going to be changing again at ING Direct pretty soon, thanks to the ING Group's 10 billion Euro bailout. As part of their bailout, they will have to sell their US internet banking business.

 http://www.nytimes.com/2009/10/27/busin ... 27ing.html

A good small community bank offers more than just a friendly face. They tend to be a better place to store your money these days.

[foglifter]

I'm still banking at ING Direct. They took over Netbank about three years ago. The whole process went so seamless, I wasn't even aware of it! Until the website changed...

Things are going to be changing again at ING Direct pretty soon, thanks to the ING Group's 10 billion Euro bailout. As part of their bailout, they will have to sell their US internet banking business.

 http://www.nytimes.com/2009/10/27/busin ... 27ing.html

A good small community bank offers more than just a friendly face. They tend to be a better place to store your money these days.

The NY Times page requires login...

[Coffee]

Martin Weiss used to have a page that ranked/rated the solvency of every bank.  I think it was hosted on theStreet.com, if I remember correctly.

Hell if I can find it, now.

[Gumby]

I'm still banking at ING Direct. They took over Netbank about three years ago. The whole process went so seamless, I wasn't even aware of it! Until the website changed...

Things are going to be changing again at ING Direct pretty soon, thanks to the ING Group's 10 billion Euro bailout. As part of their bailout, they will have to sell their US internet banking business.

 http://www.nytimes.com/2009/10/27/busin ... 27ing.html

A good small community bank offers more than just a friendly face. They tend to be a better place to store your money these days.

The NY Times page requires login...

Hmm... I'm not logged in, but I can see the article just fine. I guess it depends on how many articles you read in a day before they make you login. NYT is one of the most visited sites on the entire internet. If you don't have an account by now, you can sign up for free.

In any case, here is the key quote from the article:

"On Monday, the Dutch financial conglomerate ING Group became the first bank to be ordered broken up by regulators as the price for a taxpayer bailout of 10 billion euros ($14.9 billion). Under pressure from the European Commission, the bank announced plans to accelerate the sale of its insurance operations and its Internet banking business in the United States to refocus on its European customer base. ING nearly collapsed last fall under a mountain of troubled American mortgage assets."

This just proves that it's a bad idea to chase higher yields with a "too big to fail" bank (like ING or BoA). They get those higher yields through high risk investments. You don't want to store your money at a bank that takes on such high levels of risk.

Martin Weiss used to have a page that ranked/rated the solvency of every bank.  I think it was hosted on theStreet.com, if I remember correctly.

Hell if I can find it, now.

All the tools you need to find a bank are listed here (See Option #2 and Option #3 for a list of more in-depth websites to help compare local bank solvency):

Move Your Money : Find A Bank

See also.. Move Your Money : FAQ

[Jan Van]

Things are going to be changing again at ING Direct pretty soon, thanks to the ING Group's 10 billion Euro bailout. As part of their bailout, they will have to sell their US internet banking business.

Thanks Gumby, I wasn't aware of that. Looks like they have to sell it by 2013. Let's see where it ends up...

[Hobbery]

Man, YOU GUYS ARE AWESOME...

I'm going to look down every avenue you've shared with me, here.  Thank you.  And keep it coming.

[pplooker]

I do a Harry Browne kind of thing, and have accounts at multiple instituitions.  The "main" one that I use all the time however is at a local bank with a small local footprint that isn't in the habit of selling its notes to larger banks or other such things.  That said, it's not the most profitable bank either.

If I could ever completely stop writing paper checks, I'd get rid of one account.

ING Direct, Compass, Local Bank, those three are it for now.  I've heard the Schwab checking account is pretty good too.

[ahhrunforthehills]

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[Storm]

More and more I'm considering making Fidelity my main bank of choice.  I haven't yet started using them for checking, but they have some advantages:

1.  Fidelity Retirement Rewards American Express - 2% cash back on ALL purchases, 4% from some merchants (like Apple Online Store), no catches, no blackout dates, no limitations.  2 points for every dollar, points can be redeemed in 5000 point increments for $50 deposit into any other Fidelity account, including your IRA or brokerage account.

2.  Choice of 3 different default options for the "cash" portion of your portfolio (you can always buy your own ST treasuries if you want) - FDRXX (money market) - FGRXX (US short term treasuries) - FDIC cash sweep, which is where they intelligently "sweep" the cash portion of your portfolio into multiple FDIC insured institutions, taking care to stay below insured maximums.  For example, if you had $1 mil in the cash portion (I can only wish) they would sweep $240K into each of 4 different FDIC insured banks (staying below the $250K government insured amount) and put the remaining $40K in a 5th bank.

The only thing making me hesitate between moving all of my accounts there is the counter-party risk of having all your eggs in one basket.  Other than that, they've been a pleasure to work with, and I get the feeling that their customer service genuinely appreciates that you have a lot of choices about where to keep your retirement money.

I'm sure Vanguard has similar services, but I haven't used them yet.

[Jan Van]

I'm sure Vanguard has similar services, but I haven't used them yet.

Vanguard's banking services don't look as comprehensive as Fidelity's. Vanguard does offer VanguardAdvantage, with direct deposit, checkwriting, online bill payment and a Visa debit card. Haven't really looked into it that much yet...

[Hobbery]

Ahhrunforthehills-  Thanks for that writeup.  I went to Charles Schwab website to look at checking account details but it appears to be an "Investor checking" account that has to be linked to a Brokerage account (which apparently has no minimum balance).  However I can simplify my checking though, I think I should.

Pardon me if this is a stupid question, but what is USAA..?

And where did you find the bank ratings on TheStreet.com...? 

You guys are giving me a lot of helpful material.  I really do appreciate it.

[ahhrunforthehills]

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[Gumby]

Pardon me if this is a stupid question, but what is USAA..?

USAA is an excellent bank. Here's why:

 http://banksimple.com/blog/2010/03/21/t ... in-the-us/

You can view bank rankings here: http://www.thestreet.com/bank-safety/index.html.

Finding a "A" or "B" bank with a descent yield is not an easy find.  In fact I went through a list based on highest yield and ran it through the ratings.

Am I missing something? Those ratings are just unexplained letters. They could mean anything. It all depends on the criteria.

BankRate (free) and Bauer Financial (fee) are much more useful for bank ratings. Not only do they rate each bank, but they provide detailed financial statement about the balance sheets and risks of each bank (including borrowings, overhead, total assets, net income, return on investments, mortgaged-backed securities, etc, etc).

[ahhrunforthehills]

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