Are you considering opening your first bank or looking for one for your child? Don’t just go with the one down the block due to convenience. There are actually more options out there than you realize – and some that can save you money and keep your cash safer for the long term!
Read on for our top tips on what to look for in a bank so that you can store your wealth the smart way.
1. What Kind of Account Do You Need?
Some banks offer you more perks for checking accounts versus savings accounts, and the other way around. This can be due to higher interest rates, convenient mobile checking deposit options, or banks that don’t charge you monthly fees.
If you don’t want your money to stagnant in a savings account and want to save more, then a high-interest savings account may be for you. Although many brick-and-mortar banks don’t offer very high interest, many online banks do.
Perhaps you want to replace your current checking out. Larger banks offer more options if you want flexibility, and there are also high-yield checking accounts that are offered by online banks, credit unions, and community banks.
2. Avoid Minimum Balances
Some banks require you to have hefty minimum deposits, which essentially locks your money up in an account for the foreseeable future without earning much interest. Online banks such as Ally Bank and Capital One 360 offer checking accounts that don’t require a minimum balance. Smaller banks and credit unions are also less likely to require minimum balances.
3. Avoid Overdraft Fees
Overdraft fees are one of the biggest penalties to hit consumers. Banks can charge $35 or more for each overdraft to your account if you’ve opted for overdraft protection, which can become a vicious cycle. The bank is essentially giving you a loan with a hefty fee attached.
Overdraft protection isn’t required, even though banks will try to push you towards it. When you don’t have overdraft protection, your purchases or ATM withdrawals are simply declined if you have insufficient funds. Remember to read the fine print of whichever bank you choose and go with the option that has fewer fees, or no fees at all.
Some banks will allow account holders to link a savings account or credit card to your account and transfer money if you have insufficient funds. You’ll avoid large fees, but you’ll also be able to complete your purchases.
You’ll also want to see if your bank is capable of sending you text alerts if you have a low-balance or have crossed a threshold you’ve indicated. With banks that offer mobile apps, you’ll have a much easier time monitoring your account’s balance.
4. Consider Accessibility
Although online banks come with a lot of perks, they can lack the convenience of big brick-and-mortar banks. If you’re having issues with an account or need to deposit cash, this is much easier with a traditional bank.
Many online banks require you to mail in your cash if you need to make a deposit. If you’ve noticed any fraudulent activity on your account or need some assistance, you’ll need to chat with a customer service representative online or call. Depending on how effective their customer service is, this can either be a convenience or a major hindrance.
Carefully think about your accessibility needs and choose the bank that makes your life easier for the longterm.
5. Consider Spending Habits
You’ll also want to consider your lifestyle. If you’re making an effort to save money, many financial advisors recommend you go with a bank that allows you to open and name multiple accounts. This enables you to have one checking account and separate savings accounts for all your different savings goals, such as emergency money, gift funds, and travel funds.
Portioning out your money this way makes it far easier to budget. When you access your account online, you’ll see right away how much money you have available to spend and how much you need to save.
6. Digital Features
There are a lot of digital features available now that make your life a lot easier and your account more secure. This includes the ability to transfer funds, deposit checks, and pay bills all through an app.
Some banks offer the ability to immediately lock a debit card or customize it to not allow international purchases or purchases out of your local area. Overall, banks are pushing towards more high-tech solutions, including utilizing IoT.
If you’re predominantly a debit card user, this kind of peace of mind is invaluable. Make sure to browse a bank’s website and read their app reviews to see how convenient and developed their digital features are.
7. Read Terms & Conditions
It may seem unnecessary, but you really should read the fine print before opening a bank account, especially one that you’ve found online. Here are a few things you should check for:
- Monthly service fees
- Out-of-network ATM charges
- FDIC insured savings accounts
- Promotional deals that are expiring
You need to know exactly what you’re getting into before you join a bank or open one for your child – this saves you future headaches. If you find that you want to open a checking account with one bank and savings with another, ask yourself if this will suit your lifestyle and if you’d be able to keep up with it.
What to Look for in a Bank: Secure Money that Grows
When you consider what to look for in a bank, it’s all about finding one that suits your lifestyle, keeps your money secure through insurance and smart digital features, and doesn’t let your money stagnate.
For instance, if you have thousands of dollars worth of savings, keeping it in a savings account with a low interest rate for years will actually be losing you money. Inflation rates rise while your purchasing power diminishes. You would do better to store this in a CD or high-interest savings account.
If you have a teenager that’s opening his or her first bank account, maybe they would do better with an account that offers the ability to open multiple savings accounts. This will help them learn how to budget effectively.
If you found this article helpful, keep reading our banking section for the latest news and analysis of banking policies around the world!