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Citigroup became a savior for Wachovia customers after stepping in to rescue the consumer banking institution.
In an all-stock deal brokered by the FDIC, Citigroup (STOCK QUOTE: C) acquired Wachovia (STOCK QUOTE: WB) banking operations for $2.16 billion. This creates another mammoth bank—the top 3 U.S. banks now have more than 30% of U.S. deposits—following a similar save days earlier by J.P. Morgan Chase of Washington Mutual.
So what’s the difference between big banks and the regional banks that are sprinkled across the nation?

“The bigger the bank, the higher the fees,” says Ed Mierzwinski, the Consumer Program Director at U.S. Public Interest Research Group, an advocacy group based in Washington, D.C. Tons of banks offer free checking accounts, and make money by charging customers for the extras, like, checks or over draft charges or other fees.

For instance, the regional Iowa State Savings Bank has hassle-free checking plus account that includes free checks, including school spirit designs, free online statements, no fees at any ATM with the Shazam logo and unlimited check writing privileges. Everything is free and easy, except for the $12 a year charge for a check card.

Compare that to giant Citibank’s EZ Checking, which offers unlimited check writing, five possible free ATM transactions at non-Citiban ATMs, and no monthly fees if you maintain a $1,500 deposit, make two monthly bill payments or use direct deposit.

Wachovia account holders should expect similar account guidelines and possibly more. “Accountholders of acquired banks should always expect higher fees,” says Mierzwinski. “Watch statements closely because another thing to expect is errors, especially with direct deposits and automated bill payments attached to your old account number,” says Mierzwinski. "Banks don’t always achieve the synergies they expect in mergers because legacy computer systems turn out to be incompatible.”

So at most banks, large or small, “you are going to see an increase in fees over time as more consolidation occurs and banks will seek additional fee income because of the downturn of the markets,” says Michael Gallo, partner at firm DeCotiis FitzPatrick, Cole & Wisler. "I don’t think the consolidation is necessarily the impetus of the institutional fee more of the income generation."

But, you’re jumping ahead if you’re looking at fees first. With the current financial troubles taking place at many banks, it’s not the ATM fees that are putting banks in danger. When you’re shopping around for a bank, "the first thing you should be looking for is a bank that is well capitalized," says Gallo. The Federal Reserve is a good place to start if you’re looking for the assets of a bank you’re considering.
Look at financial offerings from universities and employers. "In general, my recommendation is to bank at a credit union not at a bank,” says Mierzwinski. If you don’t have access to a credit union or if it’s just not your cup of tea, write a pros and cons chart to help make your decision. If you’re prone to use the ATM at any and all locations, a bank with more prominence through your community or travels might be important. On the other hand, if you like to speak with a customer service representative every time you call, then a bank that offers good old fashion access, like a small regional bank or credit union, could be the best bank for you.

Check to see whether your bank is insured by the FDIC. And, “a critical component is whether the bank has tier one rating,” says Gallo. Despite all the madness involving the banking world, if you are insured, and satisfied with your institution that is well capitalized, then stick with it, says Gallo.