If you are considering a new banking institution, experts say now is the time. Reports show banks are more secure and offer better service than consumers have seen in a decade.

“Banks in Texas today are stronger than they have been in several years,” said Steve Mack, president of Compass Bank in Lakewood. He says the stability is due in part to the strong earnings banks have had in the last two years.

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Carl Schieffer, president of the independent Swiss Avenue Bank agrees.

“There are always going to be areas where there might be problems because of the local economy,” Schieffer says, “but the banking industry, as a whole, has fewer problems now than since the early ’80’s.

“In selecting a new bank, one of the most important facts to check is the health of the bank,” Schieffer says, “which can be verified through a number of banking publications.”

“Another indicator of a bank’s health might be continued changing of personnel,” Mack says.

Both banking executives agree that all banks sell the same products, yet personnel service is the key. They suggest finding out if the bank is transaction-oriented or relationship-oriented.

The following guide may be helpful in making your new bank determination.

Checking Accounts

Checking has become the heart of the banking industry since the Federal Reserve Act of 1913, and for many of us, the checkbook is our main source of financial execution. Many banks offer three types of checking accounts; Basic Checking, Checking with Interest and Money Market Accounts. Before opening a new checking account, here are some things to consider:

  • What is the minimum deposit necessary to open an account?
  • Is there a minimum balance restriction?
  • Are there any monthly maintenance fees if the account goes under the minimum balance? If so, how much is the fee?
  • Is there a fee for each check written?
  • What is the fee for stop-payment applications?
  • What are the charges for insufficient funds? Are there any protection or cash reserve options?
  • Is there a fee for the return of a check deposited?
  • What is the cost to purchase checks?
  • Are there any direct deposit services available for payroll or Social Security checks?
  • How is the interest accrued? (Daily or monthly).
  • When is the interest credited?
  • Is there a monthly maximum restriction on checks written?

Money Market Account

While Money Market accounts are yet another form of checking, they allow a higher rate of interest because of limited access to the funds. The following questions may be helpful in your determination:

  • What are the minimum deposit and balance requirements?
  • What are the interest rates? Are they fixed or variable? How and when are they accrued?
  • How many monthly transactions are allowed without penalty?
  • What are the penalties? How, why and when are they assessed?
  • Are there any monthly maintenance fees?

Savings Account

Our “nest eggs” are, in many cases, the most important aspect of personal financing, be it savings for a home, retirement or simply a rainy day, the following items can help in finding the right savings account for your needs.

  • What are the minimum amounts deposit and balances?
  • What are the below-the-minimum-balance penalties?
  • How and when are the penalties assessed?
  • What are the interest rates? Are they fixed? If not, do they change monthly, quarterly?
  • How is the interest accrued and credited?
  • How many monthly or quarterly withdrawals are allowed without a penalty? What is the fee for additional withdrawals?
  • Is the account FDIC-insured, and if so, up to what amount?
  • Does the savings account offer any additional special services? If so, what are they?

Certificate of Deposit (CD)

While a Certificate of Deposit is considered a low-risk investment, the funds must remain invested until the CD matures, or the customer is penalized. Some considerations:

  • What is the minimum deposit?
  • Are there any maintenance fees?
  • What are the interest rates? Are they fixed?
  • What are the interest paid options? Can the interest be paid to the customer, reinvested into the CD?
  • Is the interest monthly, quarterly or at maturity? Does the customer have the choice of selection?
  • What are the investment time schedules for a CD maturation? Does the customer have options? (One year, two, five and so forth.)
  • What are the penalties for early withdrawal?
  • Can the customer draw a loan against a CD? If so, will the loan interest equal that of the interest paid on the CD?

Individual Retirement Accounts (IRA)

Because of today’s economic environment, such as the reported shaky state of Social Security, IRAs are becoming more important, and are popular because the tax on the principle and interest is deferred (deductible) annually. If considering an IRA, you might ask your banker:

  • What is the difference between an IRA Certificate of Deposit, a Brokerage IRA and an IRA Mutual Fund?
  • How many mutual funds are available for selection?
  • What is the minimum investment for an IRA?
  • Is the interest rate fixed or variable?
  • How is interest compounded and credited?
  • What are the maturity schedules?
  • Are there any penalties for early withdrawal?
  • What are the federal regulations for prior notice for withdrawal or transfer?

Automated Teller Machines

Since the inception of the ATM in 1978, its usage has mushroomed to the point that one can find an ATM almost anywhere. Some helpful information can be derived from the following:

  • What are the fees involved?
  • What are the minimum and maximum amounts of withdrawal allowed per transaction, per day?
  • Can both checking and savings accounts be accessed by the same card?
  • Will the card allow transfers between checking and savings accounts?
  • What are the locations where the ATM cards are accessible?
  • Can the card be used out of town/state?
  • Is there a charge for the ATM card?
  • What happens if the ATM card is lost or stolen?

These tips were compiled from The Wall Street Journal’s Guide to Personal Finance.