Is It Safe to Start Trusting Banks Again?

Was it ever? Just kidding, folks.

Arguably, no industry’s reputation took a harder hit during this recession than banks. By now, you probably have the idea in your head of some miserly Mr. Potter from It’s a Wonderful Life trying to overdraft you into poverty, all the while some Gordon Gekko from Wall Street is responsible for foreclosing on your grandmother’s house.

It’s not your fault. The bad banks have no one to blame but themselves for the image mess they’re in. They padded their profits at the cost of their trusting customers through secret fees and even more secret financial products.

Take solace because those banks are paying for it now. According to the Federal Deposit Insurance Corp. (FDIC), there have been close to 300 bank failures since 2008. There are about 120 failures already this year.

What does this mean? It means a lot of the bad banks, with their shady practices, are reaping what they sowed. That also means that those George Baileys, who kept their noses clean and looked out for their customers, can be easier to find now.

Finding a Bank You Can Trust

Selecting a bank to bring your business to is not a decision that should be taken lightly. There are a wide variety of banks that provide a plethora of products and services. Some might fit your needs, some might not.

Make sure you take the time to find out what options are available to you. It isn’t only a monetary investment. This decision could affect the rest of your life.

Here is a list of things you should look for in your bank:

Attractive rates: Whether you’re just shopping for a good savings account or looking for the right mortgage to buy your dream home, you need to make sure that the bank services are favorable for your plan. There’s no point stashing money away in a savings account that isn’t earning you anything, just like there’s no point paying a mortgage that breaks your budget.

Transparent terms and fees: One of the most important aspects of personal finance is to keep track of where your money is going. Make sure most of it isn’t going into your bank’s own wallet.

Good business practices: You can always check the Better Business Bureau of the United States and Canada to make sure your bank is on the up-and-up.

Feedback from other customers: If you want to do a little more research, you could always check online for any complaints or praises that current customers may post on the internet, although you may want to take those comments with a grain of salt. You could also try the lost art of personal interaction as well and ask your friends, family and coworkers if they like their banks.

Online comprehension: It’s always a good idea to use a bank with a customer-friendly website. You want to be able to access your account 24 hours a day to manage your finances.

Transaction efficiency: This is an area that affects some more than others, but is important nonetheless. You have to understand how long your bank will take to process certain transactions. You don’t want to have deposits and withdrawals pending for too long or unprocessed checks floating around for undetermined periods of time.

Locations, locations, locations: One area that people often overlook is the accessibility of their bank’s branches. Perhaps you may prefer a local bank or credit union over nation-wide competitors. After all, the best banks aren’t always necessarily the biggest.  You need to understand the pros and cons of that decision.

Who Can You Trust?

In general, there are actually a lot of honest banks that customers can trust to do business with. While a few hundred failed banks is an alarming number, it’s an unfair representative of the entire industry.

According to the FDIC, there are nearly 8,000 U.S. commercial banks and savings institutions as of March 2010. That doesn’t mean, though, that there aren’t banks out there that still choose to conduct themselves in a rather unsavory manner.

But with the recent creation of the Bureau of Consumer Financial Protection, there is hope that banks can once again regain the trust of their customers.