Bank Rating
Candlefocus EditorBank ratings are typically assigned on a scale of 1-5, with 1 indicating the lowest level of risk and 5 indicating the highest. The FDIC assigns ratings that range from “Satisfactory” (1) to “Significantly Below Average” (5). FDIC ratings can be found on their website.
Generally speaking, ratings are based on a variety of factors such as a bank's capital, net income, assets, liquidity, and management. Though ratings don’t directly assess the quality of customer service or the fees a bank charges, they are still important for understanding a bank's reliability and credibility in the industry.
When deciding which bank to choose, it's important that consumers take bank ratings into consideration. If a bank has a lower rating, it's important to investigate further and determine what factors led to that rating. Do some research online and read reviews from past and current customers. Higher ratings indicate banks that are more likely to hold up during an economic downturn, while lower ratings indicate banks that may present more risk.
It's important to note that bank ratings are forward-looking and not a guarantee of performance. Ratings don't take into account events that may occur in the future that could affect the safety and soundness of the bank. It's important for consumers to stay informed and be wary of any changes that may occur with a bank's rating. Ultimately, it's best to choose a bank that has a strong commitment to safety and a high rating from the FDIC or other financial service companies.