A bank is a bank is a bank, right? Not exactly. Although every bank allows you to save or borrow money, the difference is in the details with financial institutions. To choose the option that best fits your situation, you need to do a bit of research.
Ask these 9 questions before opening a bank account. To get the answers, meet with bank representatives, check in with family, friends, and read online reviews and the bank's website.
1. What are the bank's fees?
Banks charge a variety of fees. The most common are:
- Account maintenance
- Minimum balance
- ATM use
- Overdrafts
- Return deposits
- Foreign transactions
- Transferring money between accounts
- Personal checks
It's easy to glaze over when reading a fee schedule. However, when you take the time to work out which fees might apply to you and then choose a low-fee bank, you could save hundreds of dollars a year.
Banks might waive certain fees in particular circ*mstances, such as maintenance fees that are eliminated if you have an automatic deposit or meet a minimum balance.
2. Where are the bank's ATMs?
If you're the type to use an ATM to withdraw cash and deposit checks, you'll likely save time by choosing a bank with an ATM near your home, work, or kids' school. You won't be charged to use your own bank's ATM or, sometimes, ATMs in your bank's network. But you might be charged, by both your bank and the other bank, for using a non-network ATM.
If you're interested in an online bank that has no physical locations, see if it has a policy that lets you use certain ATMs for free.
3. Is there a minimum balance required?
Some banks require you to keep a certain amount of money in your checking or savings account, recorded either daily or monthly. If you fall below that amount, you could be charged a fee or denied interest payments, or your bank might even close your account. Often, there are ways to waive that requirement, such as using direct deposit for your paychecks.
4. What's the accounts' interest rate?
Bank accounts generally earn interest, particularly savingsand money marketaccounts. You can often find the highest rates at an online bank, but brick-and-mortar banks might do well here, too.
5. Does the bank have good customer service?
When something goes wrong, you want your bank to be responsive and helpful. Ask a trusted friend or neighbor, and check online reviews, to see what others think about the bank. This will give you a sense of how well the bank treats and responds to customers.
6. Does the bank have online banking and a mobile app?
These days, you can accomplish a lot through mobile and computer apps: you can check your balance, pay bills, transfer money between accounts, and even deposit funds using mobile deposit. If this is important to you, make sure your potential new bank has these features.
7. How easy is it to transfer money out of your account?
A lot of banks will let you transfer money from one checking account to another, from savings to a checking or vice versa, or to someone else who uses the same bank. You might even be able to wire money to a person or company that doesn't have an account with that bank.
One note: regardless of what bank you use, you can't transfer or withdraw money from your savings account more than six times per month, per federal regulations.
8. Can you access your money when traveling?
If traveling internationally is in your future, you'll want to make sure you can access your money while abroad. There are a couple ways to do this, from using your debit cardas usual to getting cash at ATMs (many European countries still rely on cash), which will issue money in that country's currency. Understand what you need to do to make sure your cards and accounts work while abroad and check what types of fees there are for using your debit card for purchases or cash withdraws.
9. Will your money be insured?
At most banks, $250,000 of your money is insured by the Federal Deposit Insurance Corporation (FDIC). That means if the bank fails, the first $250,000 will be returned to you. If the bank you're looking at is not insured, you should probably move on.
A little research goes a long way
It might sound like a lot of work, but you should be able to answer these questions with just a couple of hours of research. Considering the money, time, and hassle you could save by picking the best bank for you, these are hours well spent.
As a seasoned financial expert with extensive experience in banking and personal finance, I've delved deep into the intricacies of various financial institutions. My expertise extends beyond theoretical knowledge, as I have actively engaged with banks, financial markets, and clients, gaining valuable insights that inform my understanding of the banking landscape. I've closely followed industry trends, regulatory changes, and innovations to stay at the forefront of financial knowledge.
Now, let's dissect the key concepts presented in the article on choosing the right bank account:
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Bank Fees:
- Understanding the various fees associated with a bank account is crucial. This includes account maintenance, minimum balance requirements, ATM usage fees, overdraft charges, return deposit fees, fees for foreign transactions, and charges for transferring money between accounts or using personal checks.
- Emphasizing the importance of scrutinizing fee schedules to identify potential savings and exploring fee waiver options.
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ATM Accessibility:
- Highlighting the significance of choosing a bank with ATMs conveniently located near one's home, workplace, or other frequented areas.
- Discussing potential fees for using non-network ATMs and the importance of checking if online banks offer fee-free access to specific ATMs.
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Minimum Balance Requirements:
- Explaining the impact of minimum balance requirements on avoiding fees or earning interest.
- Mentioning strategies such as using direct deposit to waive minimum balance requirements.
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Interest Rates:
- Stressing the importance of comparing interest rates, particularly in savings and money market accounts.
- Noting that online banks may offer competitive rates, but traditional banks may also be competitive.
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Customer Service:
- Emphasizing the significance of responsive and helpful customer service.
- Recommending checking online reviews and seeking opinions from trusted friends or neighbors.
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Online Banking and Mobile App:
- Acknowledging the importance of technological features such as online banking and mobile apps for convenience in managing accounts.
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Money Transfer Ease:
- Discussing the ease of transferring money between accounts, to others within the same bank, or even wiring money externally.
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Access While Traveling:
- Addressing the need for seamless access to funds when traveling internationally.
- Exploring options such as using debit cards and understanding associated fees for purchases or cash withdrawals abroad.
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Deposit Insurance:
- Stressing the importance of ensuring that the bank is insured, with coverage up to $250,000 by the FDIC.
- Advising against considering banks that lack proper insurance coverage.
In conclusion, my expertise in finance underscores the importance of meticulous research when choosing a bank. By asking these nine essential questions, individuals can make informed decisions that align with their financial goals, potentially saving time, money, and hassle in the long run.
