6 cold, hard truths to know when choosing a bank

by. Constance Gustke

Should you trust your banker to watch out for you?

Not always. They have incentives and goals to meet, such as referring a specified number of clients each month to a department that handles mortgages or car loans, says Robert Laura, president of Synergos Financial Group in Howell, Mich.

The dilemma: A banker’s bottom line may not be the same as yours. “For banks, it’s about gaining wallet share,” Laura says.

The remedy is to know exactly what banking products you need. Here are six things to keep in mind when shopping for a bank.

Deep pockets get deeper rates. Many bank programs have tiered interest rates for higher deposits, Laura says. For example, jumbo certificates of deposit, which usually have $100,000 minimum deposits, typically offer higher yields than CDs in smaller amounts, he says. “Bankers want to capture more dollars,” Laura says.

Multimillion-dollar clients may even get additional insurance over the $250,000 deposit limit per bank set by Federal Deposit Insurance Corp. How? A bank may offer a Certificate of Deposit Account Registry Service, or CDARS, says Greg McBride, CFA, senior financial analyst at Bankrate. Banks belonging to the CDARS network let wealthy investors spread large CD deposits among different banks while still being insured.

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