The more the credit crisis spreads, the more it affects the average person. Kristen wrote last week looking for advice. She’s not in a panic, but she is wondering what she should do:

I wanted to ask your thoughts on the recent seizure and sale of Washington Mutual. All of my accounts are at WaMu, including my 3.75% APY online savings account, and my 4.5% APY 12-month CD. I think these are great rates for what I have, and in comparison with what other banks are offering.

Now that WaMu is part of JPMorgan Chase, should I look elsewhere for accounts with good interest rates? Frankly, what I’ve seen of Chase bank’s rates, I’m not very impressed. I also can’t find other banks with comparable rates, but I’ve only started looking. I’ve enjoyed having all of my accounts wrapped up conveniently in one bank — checking, savings, CDs, and we just opened our kids’ savings accounts there as well.

Are the days of doing all my banking and saving with one institution a thing of the past? How can I choose a good institution without fear that it, too, will fold in six months? Or should I just stay put?

I’ve been wondering the same thing recently. None of my money is with banks that are in trouble, but I do have it spread out in three different places: one bank has my business accounts, one bank has my long-term savings, and a credit union has my day-to-day accounts. This seems goofy, especially considering my quest for simpler, more automated finances. Still, this system works right now, and is mostly automated, so I’m happy with it.

I also talked with my cousin Nick earlier this week. He’s always had his money with Washington Mutual, but he wants to move it now — not because he’s worried about losing it, but to “vote” with his dollars, to show his disapproval. He, too, wants advice on where to put his money.

A couple of quick thoughts for Nick and Kristen:

  • If you’re worried about the safety of your savings, familiarize yourself with FDIC protection. (Or NCUA protection, if your money is in a credit union.) To determine the stability of your financial institution, consult Bankrate’s Safe & Sound ratings.
  • I’m no advocate of “rate-hopping”, but I do feel it’s a good idea to check once in a while to see what the current top rates are for high-yield savings accounts. My long-term savings are currently with ING Direct, and I don’t intend to move it without a compelling reason. (Though if ING Direct were in trouble and taken over by another bank, that might prompt me to move!)

Surely many Get Rich Slowly readers have faced similar decisions lately. What choices are you making? How do you pick a bank in the current financial environment? Is it something to even worry about if your deposits are less than the FDIC limits?

This article is about Ask the Readers, Choices, Money Hacks  Friday, 3rd October 2008 (by J.D. Roth)