How to Use Bank Star Ratings When Choosing a Bank
Bank star ratings can be a very good tool when you are choosing a new bank. They are easy to understand and fairly easy to find, making them ideal for most consumers. But before you put all of your stock into a star rating, make sure you know where it came from and what it means.
Most companies that create bank star ratings use a scale from 0 to 5 stars. A five-star rated bank is one that is superior in all areas. This is an excellent choice for your money, because they are likely going to be and remain stable for a long time. Four stars is also considered excellent and most rating companies will recommend these banks to their customers. A three star bank is one that is considered as performing adequately, but not superior in any way. Banks that receive two stars are below their peer group, and one or zero stars are the lowest ratings possible. These banks are best avoided, because they may be on the brink of collapse, and you do not want to be mixed up with that if it happens.
Keep in mind that companies offering these reviews may have a slightly different scale. Always look at the scale and the meaning behind the star ratings before you start your research to ensure that you are reading it accurately. You would not want to overlook an excellent bank or put your money in a poor one simply because you did not read the reviews accurately.
Know What Bank Ratings to Trust
Not all bank ratings should be trusted. First, make sure you are very cautious when reading a rating on the bank’s own website. While it may be legitimate, you need to find out where it came from.
When you are reading bank ratings, make sure they come from independent rating agencies that are not paid by banks for the reviews. This may seem obvious, but if it is not heavily advertised on the review website, the reviews may be tainted. Always look for a trusted, independent source.
If the rating is posted on the bank’s own website, find out where it came from. Five-star banks are going to advertise this fact, but you need to know what reviewer gave them that rating in order to know if you can trust it. Also, you need to know what year that bank received that review. A five-star review from three years ago may no longer be a five-star review, because changes happen quickly in the banking industry. If you can trust it, then feel confident in placing your financial trust with that bank.
A better way may be to go to the rating website and search for banks in your area. This will help you find the four- and five-star rated banks in your area, and help you compare the products and features they offer. This may be the best way to make the right choice about your next bank.
