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Selecting the right bank for you

Opening a bank account is a simple job. There are many banks where you can open an account. The question is how to decide the bank where you can open the account. You may be opening an account for the first time or maybe opening an additional account. In either case, you will need to put some thought into it to find the bank that offers the best services to fit your needs.

You will need to look at the financial aspects involved. Banks charge you for the services provided. You will want to look for a bank that has the most competitive charges. This doesn’t mean that you use fees alone as the criteria to select a bank, but it should be considered before opting to bank there.

The following are the criteria or factors that you can consider before selecting a bank.

  1. Your needs today and for the future

This is the first criteria to consider while selecting a bank. What areyour expectations from the bank? Do you want a bank account where only your paycheck would be deposited every month? Do you want a bank account to avail of services like deposits? The answers to these questions will help you decide on a bank. Apart from your needs for today, you also need to keep in mind the needs for the future.

It is possible that you commence a business. Can the bank help you open a business account? Can you get an overdraft when you need it? Does the bank offer services beneficial for a business? You would need to get the answers to these questions to help you take a decision. It is possible that you may physically shift your place of residence or work, in which case you would want to change the bank. You need to consider whether the bank offers a facility to transfer your account to another branch.

Apart from this, you would also want to consider their online services or mobile banking services. This is convenient as you don’t have to visit the bank. You can carry out all your transactions from the comfort of your home. The trend today favors online and mobile banking. These are the aspects related to your present and future needs that can help you decide a bank to open an account. You need to find out if the bank offers all that you need.

  1. Fees and charges

Banks charge fees for their services. Once you know what services you want from a bank, the next thing is to look at the fees charged. When you open a bank account, the bank would charge you an annual/monthly fee. Different banks charge different fees. The big banks would naturally charge higher fees. This is because they offer a larger bouquet of services. There are also online banks that do most of the work through the internet. Since they don’t have expenditure on running a branch, they offer a lower fee.

You would be justified in expecting a lower fee for a savings or checking account. When the annual or monthly fee is high, you can consider a bank that charges a lower rate. The only reason why you should be willing to pay a higher fee is if the bank offers additional services that you need. Apart from the monthly fee, the charges for overdraft should also be considered. If you plan to use overdraft facility, then you would need to select a bank that charges you lesser fees for using overdraft facility.

Banks also charge fees for various transactions carried out. They may charge a fee for bank transfers. Fees may also be charged for issuing checkbooks. Fees may be charged for ATM usage. You need to consider all these fees before taking a decision. You can first shortlist a few banks based on the services you need. You can then make a comparative chart listing out the charges for all the services, including maintenance charges. This will help you make a decision easily.

  1. Rates offered by the bank

Apart from the charges levied by the bank, there are also the rates that the bank offer. When you open a savings account in a bank, the bank would pay you interest.  It would not be much, but it does matter. Similarly, when you deposit money and get a certificate of deposit, you would be paid interest on it. This is one of the investment options where you can earn returns. You can consider these rates also before deciding on where to open an account.

However, if you are not planning to obtain a certificate of deposit then you need not give too much importance to this. Similarly, the fees charged are more significant than the interest paid on savings accounts. If you need to choose between a bank that offers a higher savings interest and a bank that charges a lower monthly fee, you would do well to choose the bank charging a lower fee. The difference in savings interest is hardly significant. The maintenance charges would matter more.

  1. Access to bank branches and ATMs

If you enjoy going to the branch or using the ATM this is going to be a primary concern for you.If this is the case, then you may prefer opening an account with a bank that has branches convenient for you to visit. If you visit ATMs to withdraw or deposit funds than the bank you select should have a network of ATMs that would be convenient for you. You should open an account with a bank that allows you access to its branches and ATMs in a convenient way.

  1. Is your money safe?

When you open a bank account and deposit your money, you would expect safety. The safety of the money you deposit should be covered under insurance. In the US, the FDIC (Federal Deposit Insurance Corporation) secures the deposits of banks. If you prefer to open an account with a credit union, then it should be backed by the NCUA (National Credit Union Administration). Such a backing guarantees that your deposit will be safe.

Do not open an account in a bank or credit union that does not have such backing. You can visit the websites of these institutions to get a list of banks that are insured. Check if the bank where you wish to open an account is listed or not.

  1. Are investment options available?

As discussed above, you can deposit money to get a certificate of deposit that earns you interest for a period of time. While the interest rates offered by banks are not very high, it is a risk-free investment. Banks also offer other investment services. This includes opening a retirement account where you can save money for your retirement. You can even buy mutual funds through your bank. These investments can be made in any bank of your choice. It would be convenient if you could do all your banking related operations in one bank.

That is the reason why you need to find out if your bank offers these services. When you wish to avail of value added services of banks, you would be required to maintain a higher sum of money as your account balance. There are additional charges for using these services. You need to consider all these before deciding which bank to go with.

  1. Is the bank technology-enabled?

The bank where you open an account should make use of technology to offer you internet banking and mobile banking. Banking using your computer or mobile is easy and convenient. Most banks offer this facility for customers. Confirm if the bank or credit union you have shortlisted offers these services. You also need to check if the services are free or if you would need to pay money to use the services.

Some banks even allow you to deposit checks by sending its photograph if you are in some other location. If you need such a service, you can enquire if the bank offers it. Most banks send you alerts to your mobile phones. This will ensure you are updated on all the transactions happening in your account. Do check if the bank offers this service and if you would be charged for it.

  1. Customer service provided

Customer service is a very important activity in all customer-driven organizations, including banks. The bank of your choice should have a customer service team that can help you with any problems or address your queries. Customer service centers would be available on call 24/7. They would also have online chat options for you to answer your queries and solve your problems.  In case you have a complaint, you need to know what the mechanism of the bank is to accept and resolve your complaint.

  1. Bank timings

When you bank through the internet, the bank is open for you 24/7. Branches work only for a specific time duration every day. Some banks keep their branches open in the evenings. This would be useful for working people who do not get time in the day hours to visit the bank. You can give a higher weightage to the bank that offers such a facility. If you wish to deposit cash, you may need to visit the branch. This would be difficult if you do not have time during the bank working hours. Find out if you can deposit cash at the bank’s ATM. This facility would be convenient if you have a requirement of depositing cash.

Now that you are clear with the criteria to select a bank, it is time to take a quick look at the type of banks where you can open an account. They include:

  1. National and International banks: These are banks that have branches all over the country and across the world. These banks are large and offer a variety of services to cater to all needs of customers. They also would have multiple branches and ATMs for you to access. They would usually charge higher fees. The rates they offer on deposits tend to be less.
  2. Local banks: These are smaller banks operating at the state or county level. They may have just one branch or more than one in a small geographical area. They would offer all the services that are generally expected from banks. They would have limited number of ATMs and branches. The fees they charge would be on the higher side, but the rates on deposits would be reasonable.
  3. Credit unions: These are community-oriented banks that usually operate on a non-profit basis. They offer all the basic services. They usually charge lesser fees from customers. They also pay more interest on deposits. Most credit unions are part of a network and hence you can access ATMs belonging to other credit unions too.
  4. Online banks: These banks don’t have branches and work only online. They offer limited products, charge a very less fee, and offer higher interest rates. They usually do not have ATMs but allow you to use ATMs of other banks at a fee.

A bank account gives you access to many services, including access to investment products. Before opening a bank account, it would be advisable to spend some time evaluating banks based on the criteria discussed. Compare the services and the fees/charges, before you decide where to open your account.