Do you want to know How to Choose a Bank? Well, yes, sometimes we don’t know where to start when we want to choose a bank for business or personal use. That is why most people don’t know where to bank or which bank to bank with.
As long as you are reading this article, you will get all the information you need about how one can simply choose a bank. All you need to do is follow all the instructions given.
How to Choose a Bank
Now, if you want to choose a bank, you just need these guidelines:
- Identify the right account
Banks simply offer many different types of products and services, and comparing all of them at once would be overwhelming. A good place to start is by matching the right types of accounts to your financial goals and even priorities.
The most common accounts include:
- Checking accounts.
- Savings accounts.
- Money market accounts.
- Certificates of Deposit (CDs).
If you are then looking to simply replace your checking account, you might want to go with a bigger, more traditional bank that has multiple types of checking accounts to choose from. Or, you may want a high-yield checking account like the ones often offered at some credit unions and also at online banks.
If you are then seeking to earn the best rate of return, consider opening a high-yield savings account. Online banks typically pay higher rates than brick-and-mortar banks. The average savings account APY is 0.06 percent, but the top banks simply pay up to 0.6 percent.
Online banks are just as safe as other banks as long as they are insured by the Federal Deposit Insurance Corp. or the National Credit Union Administration for credit unions.
Money market accounts, which are very similar to savings accounts but may have check-writing privileges, are also another option. Many banks just give you a debit or ATM card, which usually has a limit on how many times you can use it each month.
CDs also offer another way to earn interest. When you then lock up money in a CD for a set amount of time—anywhere from a couple of months to even several years—you will then earn a guaranteed rate of return.
You can also access your money before the CD matures, but you will then likely have to pay fees or give up some interest or even the principal. Rates and terms offered will then vary from one bank to the next, so you should consider your financial goals and whether the CDs offered to fit your needs.
- Look for banks that charge low or no fees
Now there is no need for you to stick with a bank that simply charges avoidable fees when many banks charge low or no fees.
Online banks are simply known for their low fees. Because they do have few branches, they also have lower operating costs, so they normally do not charge as many fees as brick-and-mortar banks. There are even ATMs that simply provide no-fee withdrawals for certain online bank cardholders.
But there are monthly maintenance fees, ATM fees, and overdraft fees. The average overdraft fee is about $33.58, according to a Bankrate study. Even opting for an overdraft protection program (where the bank simply covers a purchase that you cannot afford) can be expensive. The 2017 Consumer Financial Protection Bureau study has found that those who opt into overdraft protection pay about seven times more in fees than those who do not.
Many banks are simply taking steps to eliminate or reduce overdraft fees, including larger ones such as Citibank and Bank of America. Think about whether the banks you are comparing have caught on to this trend by making their overdraft policies more flexible.
Once you have found the best account for your needs, just take these steps to avoid fees:
You should link your checking account to another account at your financial institution so that if you overdraw your checking account, the bank will simply help you pull money from the other account to cover the transaction. There may also be a fee for this service, but it is typically less than an overdraft fee.
Also, sign up for low balance alerts through your bank or credit union’s website or app. These alerts, which may then include text messages, warn you when you are at risk of overdrawing your account.
See how you can simply waive the monthly maintenance fee if there is one. Often, banks also need you to keep a certain amount in your account every day or set up direct deposits to avoid the fee.
- Consider the convenience of a bank branch
When it comes to banking, another key factor for you is accessibility.
Paul McAdam, senior director of banking and payment services at J.D. Power, says that the ease of access to ATMs, branches, and online and mobile banking are all very important things to think about.
What conveniences you simply prioritize may then vary depending on what you are accustomed to. Consumers who are also used to doing most tasks online may then value digital banking resources over the convenience of branch locations. The opposite may even be true for those more accustomed to branch banking.
Still, branches will continue to play a role in the lives of most consumers, with 78 percent saying they have simply opened their most recent account or product in person at a branch, according to J.D. Power. Its data also show that the most common reason people gave for choosing their main financial institutions was that they had branch offices in convenient places.
So, even if you plan to do almost everything online, you might also want a bank with some physical branches.
- Take a look at credit unions
Many consumers are even familiar with the biggest banks, but credit unions are worth considering too.
Credit unions are also member-owned, not-for-profit organizations. Profits are simply returned back to members in the form of lower fees, higher savings rates, and even lower borrowing rates.
Joining a credit union is not as tough as it used to be. Quite a few are simply available nationwide, and many also allow you to simply qualify for membership by joining an organization or making a donation to a charitable organization.
- Find a bank that supports your lifestyle
The bank you choose should also meet your needs. If you are then self-employed, for example, you simply want a bank that can provide support as you build a business.
If you are also trying to save more money, look for a bank that offers features to help you reach your goals, such as:
High-yield savings accounts
There are a variety of CD terms, so you can either find a term for your specific goals or build a CD ladder.
The ability to open and name separate savings accounts For example, you may simply have a savings account for your emergency fund, one for a travel fund, and another for a gift fund.
Consider your spending habits when you are deciding where to bank. Many banks simply have budgeting tools built into their websites or apps that make it easy to track your expenses and also see where your money is going.
- Examine the digital features
Most banks simply offer basic services through an app or a website, like the ability to also transfer funds, pay bills, check balances, and even make mobile check deposits. But not all banks will offer advanced digital capabilities.
Not all banks simply offer features that are increasingly sought by consumers, such as the ability to lock a debit card (and also prevent a stranger from using it) or even manage mobile banking alerts. Also, not all online banks will offer a smartphone app, which may then require that you sign in to your account through a mobile browser.
- Understand the terms and conditions
Important information about a bank account can simply be found in the account agreement, which may not appear on the account’s home page but can usually be found elsewhere on the bank’s website. Reviewing the disclosure can also help ensure you don’t overlook any hidden fees.
If there are monthly service fees, the account agreement will then spell out how to waive them. If there are also out-of-network ATM charges, the fee disclosure may even let you know whether the bank offers refunds.
Make sure your savings will be federally insured by the National Credit Union Administration or the Federal Deposit Insurance Corp. (just in case your bank simply closes).
Also, as you then compare products, watch out for promotional deals that will expire. Some banks may just offer tempting teaser rates that drop to much lower rates in the long run.
- Read reviews for banks you are considering
Once you have then started comparing a handful of banks, reading expert reviews about them can also give you a better idea. A good idea of what you will expect from the financial institution, including customer service and its products. Customer reviews can also be helpful, especially since many consumers simply tend to stick with their banks for a long time.
If you are having a tough time settling on one bank, managing accounts at several banks or credit unions may be the best solution for you.
And if you want more information about this, no problem. For more, visit Bankrate.com, where you will get all the information there is about this topic and also some other details you need to know. Or you can simply click here for better information.