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Searching for the Best Bank: 8 Factors to Consider

With all the news of bank failures, mergers, and the launching of new online institutions in the last few years, it's tough to know which way to turn when choosing where to do your financial business.

No single institution is right for every customer; the best bank for you depends on your needs. Your choices boil down to three main categories -- large, national banks; smaller regional banks or credit unions; and Internet banks. Which is right for you? Here are eight key factors to consider:

1. FDIC Insurance

Virtually all banks are FDI- insured, which means your deposits are safe up to $250,000 per financial institution. Beware that the limit is scheduled to go down to $100,000 on Jan. 1, 2014, except for certain retirement accounts. Credit union deposits are federally-insured at the same levels by the National Credit Union Administration. As we've seen in the last couple of years, banks and credit unions can fail, so make sure you stay within the limits.

2. Products

What products do you need? Are you looking for a place to build savings or get a loan or both? Big banks offer the advantage of a wide scope of products, but if all you're looking for is a place to park your emergency savings, then an Internet bank that offers top-notch rates might be a better choice.

3. Savings Rates

Compare savings rates on the products that interest you to get the biggest bang for your bucks. Search online for the best rates for CDs, savings accounts, and money market accounts.

4. Best Bank Relationship

What kind of relationship are you looking for from a bank? If you like doing business at a branch where everyone knows your name, a community bank or credit union is your best bet. But if you haven't visited a branch in years and conduct all your business on your computer or at the ATM, consider an online bank that offers better savings rates than your brick-and-mortar institution.

5. Access to your Money

How easy is it to access your money? With some online banks, you have to snail-mail checks for deposits. Make sure the ATM network features enough machines convenient to your location. If you travel a lot, look for a bank that will give you easy access to your money on the road.

6. Best Bank Technology

How much of a techie are you? Most institutions let you do online banking, but not all of them employ the latest technologies. USAA Bank was the first to launch a service that lets consumers deposit checks by cell phone. Using an application for the iPhone or Android, customers can snap pictures of the front and back of checks with their cell phone cameras and transmit the images to the bank. Some other banks, including Chase, Citibank and Bank of America, are following suit, but not all banks will boast this and other upcoming high-tech capabilities.

7. Fees

Why pay fees when you don't have to? Read bank reviews and the fine print of account disclosures to learn what fees you'd have to pay for services. Also, understand the requirements for the accounts you're considering, such as money market, savings, and checking accounts.

8. Customer Service

Great rates don't make up for poor customer service. Is it easy to get in touch with a real, live human being when you need to, or do you get lost in a voice mail maze when you call the customer service number? If face-to-face personal interaction is important, visit the branch and watch how employees interact with customers. How long does it take for someone to greet you?

Choosing a bank isn't a snap, but with today's wide variety of options you have a good shot at finding an institution that meets your needs. You can bank on it.



5 Places to Stash Your Cash For Emergencies

There are two keys to creating an emergency savings fund to tide you over in case you lose your job, get hit with medical bills, or face some other unexpected yet vital expense.

One, you need to set aside enough cash. Financial experts recommend saving at least three to six months of living expenses. If you're not there yet, set aside some cash each month to build toward the goal.

And two, you need an account or investment vehicle that provides some earnings yet gives you quick and easy access to your money. Here are five places to consider parking your emergency savings:

1. Online High-Yield Savings Account

Online banks today typically offer higher interest rates than many traditional brick-and-mortar branches. Search online to find the best yields, and open an account. Many online savings accounts have no minimum deposit requirements or fees, and all you have to do to get the account started is provide the routing and account number of another bank account that allows electronic transfers. Set up monthly automatic transfers from a checking to your savings account to continue building your emergency fund.

2. Money Market Account

Money market deposit accounts traditionally have offered better yields than other savings accounts. With money market accounts, you can write a limited number of checks or make ATM withdrawals. (All savings accounts are limited to no more than six withdrawals per month under federal regulations.) Like other deposit bank accounts, money market accounts are insured by the FDIC, so your investment is safe as long as you keep deposits under $250,000 per financial institution. (The coverage limit drops to $100,000 per person per bank in 2014.)

3. Money Market Fund

Money market funds are very similar to money market deposit accounts. They often are supplied by the same banks that offer money market deposit accounts, and they provide the same types of benefits. However, money market funds, unlike interest-bearing money market accounts, are actually mutual funds that invest in short-term, fixed-income investments, such as government securities. They are not insured by the FDIC, but they are considered very low risk. Still, it pays to choose funds carefully.

4. CDs

CDs are less liquid than savings and money market accounts, because you lose some of your interest earnings if you withdraw money before a CD has matured. Investing all your emergency savings into one CD would be unwise because you'd have to suffer the interest penalty unless your emergency coincided with the maturity date. And when does life ever deliver a perfectly timed emergency?

Don't count CDs out, though, for emergency funds. Build a CD ladder by investing in multiple CDs with different maturity dates. A 12-rung ladder with a CD maturing each month would provide monthly income for a full year. Each time the CD matures, simply reinvest. Look for the best CD rates online, and make sure you understand the terms of the CDs before investing.

5. Treasury Bills

Consider investing in U.S. Treasury Bills, or T-bills, which are issued with terms of four, 13, 26 or 52 weeks and are auctioned on a regular schedule. Bills are sold at a discount rate of the face value. So you might pay $990 for a $1,000 T-bill and then get the full $1,000 when the bill matures. You can buy bills from the U.S. Treasury Department on its TreasuryDirect Web site through non-competitive bidding or through banks and brokers through either competitive or non-competitive bidding. Stagger the maturity dates of T-bills to provide regular cash flow in case of emergency.

You don't have to choose just one investment vehicle for your emergency savings. You can use a combination of savings and money market accounts, CDs and T-bills to provide a safety cushion and well-earned peace of mind.



Protecting Retirement Investments in a Divorce

With more than half of first marriages and sixty percent of second marriages ending in divorce, you're certainly not alone if you're facing the difficult task of piecing together a new life after the ending of a marriage. More than 2 million Americans get divorced each year.

Aside from the practical and emotional challenges are long-term financial issues, and among these are your retirement investments. Oftentimes retirement investments are a couple's largest asset, or are at least second after the house. Don't get so caught up in the short-term financial details of divorce that you overlook tending your nestegg. Good decisions about retirement made now will help secure a solid financial future later.

Retirement Investments: What To Consider

Here are key things to do and consider, according to the National Endowment for Financial Education:

• Social Security Benefits

Contact the Social Security Administration to request a Personal Earnings and Benefit Estimate Statement. This will project how much Social Security income you'll get based on your earning history. If your benefit is paltry, bear in mind you might qualify for a portion of your spouse's benefit instead. You can get up to fifty percent of your spouse's Social Security benefit if you were married at least ten years and you haven't remarried by the time you apply for benefits. The earliest you can receive benefits is usually age 62. If your spouse made a lot more money than you did and you're just under that 10-year mark, you might want to put off the divorce a bit so you can qualify for benefits based on your spouse's earnings.

• Retirement Plans and Pensions

A first step is to find out what retirement plans and pensions you and your spouse have. Don't forget about retirement plans at former jobs. Gather the records for all these investments before you see your attorney. Retirement investments could very well be your largest asset, so carefully consider any decisions about retirement plan distributions. Under federal law, you're entitled to receive a portion of the benefits earned by your spouse during the marriage. You'll need a court-ordered document called a Qualified Domestic Relations Order to direct the administrator of the retirement plan on how to divide the benefits between you and your spouse.

Mind the Details to Protect Investments

Take extra care with splitting up retirement plans. The Wall Street Journal reported recently that neglecting or mishandling a QDRO can have dire consequences if the details are not spelled out carefully. Even couples who intend to be fair and equitable can end up burned if the agreement isn't worded exactly right.

You don't need a Qualified Domestic Relations Order to split up IRAs. A divorce decree shows how they should be divided.

• Cash Flow

If you need money right away and don't want to wait a long time to receive benefits you can negotiate for cash or property that's equal to the value of your spouse's retirement assets. But consider other means first to protect your nest egg for retirement. Consider downsizing your lifestyle. You might be better off selling the house and moving to a smaller, more affordable home. Eliminate unnecessary expenses, and create a realistic spending plan. Consider ways to boost your income, such as working a second part-time job.

Finally, bring on a financial legal expert to help if your divorce attorney isn't highly skilled in working out details for retirement. Although many divorce attorneys have the experience and resources to handle this aspect, some might not have the specialized skills you require. If your attorney shrugs off the retirement issue as a slam-dunk, get other help.



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Disclaimer:This content is not provided or commissioned by American Express. Opinions expressed here are author's alone, not those of American Express, and have not been reviewed, approved or otherwise endorsed by American Express. This site may be compensated through American Express Affiliate Program.

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