Best Bank Accounts
How to Choose the Best Bank for Your Needs
When you’re shopping for a new bank, make sure you understand a few things before stepping into the bank around the corner from your home. You should consider whether you are willing to pay higher fees for the convenience of the location, or if you are prepared to make a little extra travel effort for lower fees. The first thing is to evaluate your banking needs.
Here is a quick checklist of factors to consider:
1. ATM Fees
It may come as a surprise to you, but this is one of the top money-draining factors. You may pay from as little as $0.99 cents and as much as $5.00 per withdrawal when using an ATM that's out of the bank's network. On top of that, the owner or operator of the out-of-network ATM could impose a surcharge too.
2. Minimum Balance Requirements
After opening an account with a bank that is offering promotional rates, customers forget to check for qualification conditions during the promotion or conversion fees or minimum balances after the promotion ends. You may be offered an excellent rate but high transaction fees negate the benefit you are receiving. Always confirm the total cost of banking not just one part. Also, make sure that when you open an account with a minimum balance restriction that you are prepared to satisfy that obligation to avoid monthly maintenance fees.
3. Relationship Banking
Banks may offer what’s called “Relationship Banking”. This is a type of banking where they encourage customers to hold several different types of accounts, such as checking, credit card accounts, CD’s, Money Market, etc., by offering attractive rates, savings plans and package transaction fees for a portfolio of services. These plans may allow customers to combine account balances to avoid maintenance charges or offer better rates and benefits. It is important to compare plans with more than one bank. Also, it may be more beneficial to hold individual accounts with different banks to maximize savings that combined offer better rates and fees than a single bank offering.
4. Earn Interest on the Money in Your Account
There can be various accounts offered by a bank -- some allow customers to earn interest on their balances. Savings accounts or CDs typically offer interest earnings. However, there may be accounts that require high balances just to earn interest. You'll have to decide if you'll be able to maintain those balances.
5. Special Accounts
Investigate whether a bank offers special accounts. Many banks now offer special accounts for senior citizens, teens, and children with reasonable APY rates, no minimum balances, and no fees. There are also Christmas/holiday accounts, vacations accounts, military accounts, and health benefit accounts to look into.
6. Fees for Special Services
Before you sign up with a bank, it’s important to consider whether you’ll need to get printed copies of canceled checks or if you will be writing many checks. Most banks now destroy the original canceled check and keep records on microfilm. If you need to retrieve these, some banks may charge as much as $5 per copy.
If you need to write many checks, it may be worth looking into the bank’s online banking options. Most banks will give you a certain number of checkbooks when you open an account, but customers will have to purchase subsequent checks. It may be cheaper to view canceled checks online and to print checks directly from a printer.
Customers have to be wary of overdraft fees and protection options. It’s important to check the individual bank’s terms of the agreement for overdraft protection. Some are offering a line of credit feature, which offers rates high or lower than overdraft protection. There can also be additional fees for using the protection if you bounce a check. It’s important to find out how much it costs for this protection and the options the bank offers to use these services.
7. Direct Deposit
Because of the cost savings achieved by banks through direct deposit transactions, some banks will offer incentives for customers to use direct deposit. They may offer reduced or waived maintenance fees or free ATM usage among other things.
8. Charges Per Transaction
Besides a monthly maintenance fee, your bank may charge you a fee for individual transactions such as check writing, transfers between accounts, checking balances, and using ATM’s. These can add up significantly per month. Also, remember that just because an account is offered as “Free Checking”, it may not be completely free from fees above certain levels or it may be conditionally free on maintaining a minimum account balance.
9. Online Banking
Good online banking features are becoming more and more important for discerning customers these days. It saves on time, money, and on paper. However, your bank may charge you a monthly fee for these services, although many banks offer these for free. Also, verify that these services are being offered from a secure site. Read the fine print; do you understand what your protection or liability is if your online account is hacked?
There are great opportunities to save and get great rates through virtual online banks. These banks can offer customers some advantages in lower fees or better rates, however, it’s important to evaluate how convenient or cost-effective these are if you need to conduct physical transactions.
Also, make sure these online banks are FDIC-insured or member of the FDIC. This means that your deposits are insured by the FDIC. Some overseas banks may not be able to offer you this coverage. There also may be some restrictions on how much of your deposit is insured if your online bank actually has an FDIC-insured parent bank.
Customers can benefit from looking for banking promotions. Banks run different types of promotions for different types of account year-round. They are a great way to get started with any type of account. Banks will sometimes offer higher rates, free features, discounts, waived fees, free gifts, cash, etc. Just be sure to read the fine print and know what fees or features will come into play once the promotion period ends.
11. Bank Accessibility
Once you’ve assessed your banking needs, don’t forget to consider how you will access the services you’ve signed up to receive. Location, extended hours, local, national or international branches and online capability are also considerations when selecting the right bank.
These are some basic pointers in getting started. The most important thing for a prospective customer is to do their homework. You should not just compare different banks, but also different types of account products offered by each bank. Do this, and you’re bound to get a great deal, or at least be far more educated and conversant in negotiating through the hundreds of options that banks offer.