Once in a while, one has to change banks. Mom called today -- it's that time. As retirees, there's a little bit of savings, and that used to be earning some money. Recently the bank has changed its rates, and this particular account is now getting "zero-point-nothing." Mom and Dad are 50-year customers at this bank, and the bank is essentially saying, "ehhh, sucks to be you." So it's time.

She's picked out a bank that meets most of her needs (local branches, good offers, etc.) and has the kinds of accounts she's looking for. That part is pretty much nailed down. The question now is, how does one check a bank's "health?" This bank is FDIC insured and all that, but nobody wants to get caught up in a bank that's otherwise in bad shape, right?

So there's the root of the question. How can one find out how well a bank is doing, and get some reassurance that it's not on the verge of failure or other bad events?

Thank you, all.

If you are at an FDIC insured bank, the risks are essentially infinitesimal. Move and be happy.

Minimal to zero risk with FDIC insured. Suggest they go in and have a face to face with the branch manager and then make the decision.

Also the way they structure various accounts within FDIC 250,000 limits per account, One married couple can get around of million of insurance if that matters to you. Most brick and mortars bank savings suck still. Ally bank online only is ~2.1. Short term CD’s closer to mid 3’s and t I’ll less than a year can be had for 4% in your brokerage account.

Don't answer if you feel uncomfortable, but let ne ask what sort of balance is generally in the account. If it's less than 5000, or even 10,000 the amount of interest is usually minuscule. More important is are there any fees. Statement fee, check costs, etc. My bank pays a tiny bit that fluctuates tied to the prime. I'm usually under the minimum to require IRS filing. But zero fees and free plain jane checks.

Any thought of a credit union?

No bank is paying diddly-squat in interest any more.

quote:

Originally posted by 229DAK:
Any thought of a credit union?

This is what I was going to suggest. I moved some of our funds to Penfed CU and have been happy with them. I’m not sure how many brick and mortar locations they have or if there is one near your parents but they are paying a much higher rate on savings accounts than regular banks.

CUs are best for loan rates. But the one I've been with forever has no branches outside of the east coast. I do everything online and on my iPhone. Using their "share branches" in Phoenix, I'm limited to a daily max of $1000 from an ATM and $1000 at the counter. That's been a problem a few times when buying private party vehicles or expensive toys. So then I got another account at a local bank, and the decision came down to location, as in on the right side of the road I travel the most, and that they're not involved in any of the BS BofA and WF are. It'd be hard to choose a bank on ROI, as they pay next to nothing unless you're at a commercial dollar amount level.

Is Navy Federal Credit Union an option?

quote:

Originally posted by egregore:
No bank is paying diddly-squat in interest any more.

Actually, that's no longer true, as of just the past few months. Several banks have recently begun offering 2.5% to 3% interest on their high yield savings accounts. CDs and Money Market accounts are up there too.

That's been unheard of for the past decade plus, when no banks were offering over a fraction of a percent on even "high yield" savings accounts. But that's what happens when overall interest rates goes up, as it has been doing dramatically lately... Banks can offer higher interest rates on their savings accounts too.


Granted, that's still a ways off of the 5% to 10% interest that some folks like to fondly remember from the savings accounts of the late 1970s and early 1980s, but we also hopefully won't be seeing anywhere near the 15% to 20% car/home/business loan rates of that same time period either!

quote:

Originally posted by V-Tail:
Is Navy Federal Credit Union an option?

I bailed on them as they forced vax their employees.

Run from Chase Bank. I am ON my moms account. When she died, long story short, they froze her account, money quite literally disappeared from the bank statement. I spent months with the 'deceased persons branch' and got nothing but roadblocks and unhelpful people. Months of headaches and repeated calls and faxing docs to get money back.

My wife calls Chase the Satan Bank due to their behavior.

Run far, run very far away from Chase.

Here's a dirty little secret about Chase too. They purposely put ACH drafts through a day early in an attempt to make the customer go NSF and then collect the fee. This is very common with the folks living on SSI, who have a lot of automatic payments coming out to coincide with their SSI deposits. A lot of folks don't notice the NSF fees and Chase is counting on that. If you fight them on it, they'll usually fold and refund it. But the folks who don't fight those fees are considered a revenue stream by Chase.

quote:

Originally posted by RogueJSK:

quote:

Originally posted by egregore:
No bank is paying diddly-squat in interest any more.

Actually, that's no longer true, as of just the past few months. Several banks have recently begun offering 2.5% to 3% interest on their high yield savings accounts. CDs and Money Market accounts are up there too.

That's been unheard of for the past decade plus, when no banks were offering over a fraction of a percent on even "high yield" savings accounts. But that's what happens when overall interest rates goes up, as it has been doing dramatically lately... Banks can offer higher interest rates on their savings accounts too.


Granted, that's still a ways off of the 5% to 10% interest that some folks like to fondly remember from the savings accounts of the late 1970s and early 1980s, but we also hopefully won't be seeing anywhere near the 15% to 20% car/home/business loan rates of that same time period either!

Well yes, many banks are offering 2-3% on CD's and such. I though we were discussing the little interest banks gave on checking accounts. It never was much, but now it's next to nothing, if they give it at all. I'm just happy to have an account with zero fees.

Use Weiss ratings by plugging in the banks name.

https://weissratings.com/en/se...federal+credit+union

Why Interest Rates Are Rising Everywhere—Except Your Savings Account

Many banks continue to offer meager yields on savings accounts, but it can pay off to shop around

The Federal Reserve’s campaign to fight inflation by raising interest rates seems to have reached nearly every corner of the economy except one: Americans’ savings accounts.

Mortgage rates doubled this year to nearly 7%, and it has become more expensive to get a car loan or carry a credit-card balance. Yet the interest on savings accounts barely budged. In March 2020, the average annual yield on a standard savings account was 0.1%, according to Bankrate.com. It fell to a pandemic low of 0.06% after Americans’ personal saving rate peaked, and is now up to a wan 0.14%.

U.S. commercial banks held $16.8 trillion in deposits as of June, according to the Federal Deposit Insurance Corp. Much of that vast sum sits in individual checking and savings accounts, earning little interest and losing significant value to inflation. There are savings accounts that yield as much as 3%, for those willing to shop around.

At a hearing on Capitol Hill last month, Rep. Michael San Nicolas (D., Guam) remarked on depositors’ underwhelming returns to the leaders of the nation’s largest banks. “One of the only silver linings in a rising interest rate environment is that savers are supposed to be rewarded for their savings,” he said. “They’re supposed to see the interest that they earn on their savings accounts go up.”



In response, the bank chiefs said that they expected the interest rates on their customers’ deposits to increase in the future, based on the actions of the Fed and their competitors.

The country’s largest banks can keep payouts on savings accounts low because they seem to have plenty of deposits to cover their lending businesses for now and don’t need to attract more by raising interest rates.

Some other banks are offering some of the most generous yields in years, but those still paying out meager interest can count on customer inertia: We fail to take advantage of better deals, because switching banks seems like a headache.

Were that dynamic to change—that is, if enough consumers took their money elsewhere in search of higher returns—banks would be compelled to raise interest rates or make fewer loans, said Philipp Schnabl, a professor of finance at New York University’s Stern School of Business.

Some banks, particularly online ones, have inched up yields in response to the Fed’s rate increases. The annual interest on an online savings account at Ally Bank rose from 0.5% in May to a chunkier 2.1% last month. As of Sept. 30, according to Bankrate, the highest-yield nationally available, FDIC-insured account was UFB Direct, which was paying out 3.01%.



The Federal Reserve approved a third-consecutive 0.75 percentage point rise in September. Chairman Jerome Powell said he anticipates that interest-rate increases will continue as the Fed fights high inflation. Photo: Kevin Lamarque/Reuters
Greg McBride, Bankrate’s chief financial analyst, advises shopping around. “If you’re looking in the right place, it is the best you’ve seen since 2009,” he said. “If you’re just standing pat at the same place you’ve always had your savings, it probably doesn’t look a whole lot different than 2021.” (Bankrate earns money when customers open accounts using offers on its website.)

Even high-yield savings accounts are a weak buffer from 8.3% year-over-year inflation, but their annualized returns of 2% or 3% still beat a return of 0.01%. The median balance of a transaction account, which includes checking, savings and other accounts, was $5,300 in 2019, according to the Federal Reserve, the latest data available. Receiving 3% interest on that balance, versus 0.01%, would work out to a difference of about $160 a year—not an enormous amount of money, but also not bad compensation for opening a new account, which can typically take about 15 minutes of work.



People with much larger balances stand to gain more, yet those depositors don’t always bother to move their money. Tony Chan, a financial adviser in Orange, Calif., said he recently met with a new client who had about $1.2 million in an account earning 0.01% a year, or roughly $120. Mr. Chan said the money was previously invested in the stock market, but the client sold his holdings last year out of fear and has been too busy to find a good place to put it.

Mr. Chan recommended the client move most of the money into a higher-yield account and the rest into certificates of deposit. He estimates that these switches would yield at least $36,000 in interest annually.

Depositors’ inertia can be strong, to their detriment. In a study published in 2021, researchers analyzed the behavior of customers at five U.K. banks. The average customer stood to gain £123 a year, or about $190 at the time, from moving their money to a higher-yield account, yet the researchers found that switching is “rare” and that even customers with relatively large balances were no more likely to do so.

In a follow-up survey, 66% of respondents said that switching accounts would be worthwhile for them if they gained at least £100 in annual interest. But in one subset the researchers studied, despite the fact that 26% of customers could have gained at least that much by switching, only 3.5% actually switched.

“The biggest reason consumers don’t seem to reoptimize their finances seems to be a belief that it will be a huge hassle,” said Christopher Palmer, a professor of finance at MIT’s Sloan School of Management and a co-author of the study. The study also found that customers tend to overestimate how much of a hassle it actually is, and underestimate how much their interest rate might increase.

Financial advisers consider it prudent for people to cart their money elsewhere if they can find a better offer. Savers can also consider safe high-yield alternatives to bank accounts, such as government I Bonds.

LINK: https://www.wsj.com/articles/w...feature_below_a_pos1

Pyker: thank you for the link. That led to a discussion of the "Texas ratio," which will get some more of my effort shortly.

NavyGuy: I don't have a guess as to balances.

229DAK: I have suggested a credit union. I've got a great one nearby me, but it's not so nearby the parents. In the great words of Mom, "Always keep your banker and your lawyer within choking distance." I did sent a link to my CU's rate page, for comparison to whatever her chosen "replacement bank" offers.

V-Tail: I'm not sure if Navy Federal is an option. I assume it is, in general, but the lack of a branch in their area may be the limiting factor.

Chase Bank is likely a no-go also. That's a way-too-big bank, and likely has no branches over in the sticks.

41: thank you for the Weiss link. I'll check that out this evening.

Looks like you are on the right path. Texas ratio is one measure of a bank’s health. Yes FDIC insurance protects you up to the limits. BUT if the bank gets closed by the FDIC or a credit Union by NCUA you may not get instant access to funds. Inconvenient at best, but disastrous if you had a critical need.
Yes a married couple can structure up to four times the individual limits but if you need much higher limits there is also the CDARS program, now called IntraFi Network. Not sure what the maximum limit is but it looks like CDs maybe capped at $8 million. But there are thousand of participating banks so at $250k a bank…sorry thread drift.