Sunday, March 1, 2020

6 Things You Should Consider When Choosing a Bank

How to Choose a Bank That Meets Your Needs

       The options are endless when it comes to financial institutions and the variety of products and services that they offer. So how do you choose among national banks, community banks, credit unions, and digital-only banks? You have to consider the services and features that you value.
There are so many banking options out there that you could  reading and comparing the fine print. It’s no wonder choosing a bank can easily become overwhelming.

Choosing a bank, whether it’s your first bank, you’re looking to open a specialized account, you’re considering an online bank, or you’re looking for different banking services, from the wide array of options out there can be daunting. Of course you know what you need, but, in the moment, you may forget to ask about important details that could make or break your banking experience.
Here are some important items to add to your checklist when you choose a bank.
Types of Banks
You can choose from several  types of banks for your financial services. They offer similar products and services, especially if you’re just looking for  savings accounts and a debit card for spending, but there are differences.

Big banks are the national names you’re familiar with. There are numerous branches on busy street corners in large cities, and you probably hear about big banks in the news. These institutions have national and multinational operations.
Products and services available include almost anything you can imagine 
Rates on savings and CDs usually aren’t the highest.
Fees tend to be on the high side, but it’s possible to get fees waived 
Branch and ATM locations are numerous if you care about banking in person.

Local banks operate in smaller geographic areas. They tend to have more of a community focus, and they’re an essential part of your local economy.
Products and services available are usually sufficient for most consumers. These institutions should have everything you need personally, although large businesses and the ultra-wealthy may need to obtain specialized services from other providers.
Rates on savings and CDs vary, but you might snag a deal with advertised “specials.”
Fees tend to be reasonable, and fee waivers are often available.
Online banks have established themselves as a solid option, and it’s worth having an online-only account even if you don’t use it regularly. That said, going 100% online with your money can be tricky—physical locations still have value.
Rates on savings and CDs are often higher than you can find anywhere else.
Products and services available include free checking and savings accounts as the main attraction, but other products may be available.
Fees tend to be low. Most accounts are free unless you bounce checks or request certain transactions (like wire transfers, for example).

Credit unions are not-for-profit organizations with a strong community focus. To open an account, you need to qualify and join as a “member,” but this process is often easier than you think.
Products and services should be sufficient for most consumers and small businesses. The smallest credit unions might offer slightly less, but you can almost always find checking accounts, savings accounts, and loans.
Rates on savings and CDs are often higher than big banks, but lower than online banks.
Fees tend to be low, and it’s relatively easy to find free checking.

Things to Consider When You Choosing a Bank
There are many things to consider when choosing a bank and the array of options can be confusing. Here’s a checklist to guide you through the process.

Your money’s safety
You have insurance to protect your health, your car, your home — and you should have insurance for your cash, too. Look for banks whose deposits are backed by the Federal Deposit Insurance Corp. or credit unions whose deposits are secured by the National Credit Union Administration. Both federal agencies insure balances of up to $250,000 if the bank or credit union fails.
Most banks or credit unions are insured. You can check the websites of the FDIC or NCUA to see if your institution is covered.

Interest Rates
Main factor to consider is how much interest you can earn on bank deposits, or will be charged on loans. You have to looking to generate high interest income through saving accounts and certificates of deposit, even though you may have to give up other benefits to find this.

A bank may have the best customer service in the counry, but if their interest rates are the lowest around, you may to find a better interest rates. Similarly, you might consider putting up with extra restrictions if it means you can earn a maximum level of interest on your deposits. 
Ultimately, your bank should fit your current situation. If you want to take out a loan, prioritize a bank that offers low loan rates. Then, once you are paid off and no longer need a loan, move to a bank that better suits your other banking needs.

Fees
Fees are a main factor to consider. Since fees often depend on banking habits, it pays to be aware of these habits in addition to static fees the bank charges. Know how many checks you’ll write, what balance you’re likely to maintain,  and if you’ll have a savings account, how much you’re likely to keep in it.

No-cost setup and account maintenance
If you’re in the process of choosing a bank, a low or fee-free checking account should be a given; there’s no need to be charged for the pleasure of setting up an account.  
Even if you were going to set up direct deposits anyway, or keep enough of an account buffer that you’re not worried about dipping below a minimum monthly balance, it’s less stressful to have a low or fee-free checking account, rather than a checking account with strings attached. Make sure a checking account is a part of that honorable 37% of low or fee-free checking accounts by looking for and avoiding ‘free’ checking accounts with terms such as ‘options to avoid the monthly service fee.’

Types of Financial Products Available
There are 2  types of financial products available from most banks: income generating assets and loans . Best banks will offer a wider array of each product type, but that doesn’t necessarily mean a better deal. There are some financial products by type and what to look for.

Certificates of deposit. 
Find for high interest rates and varying CD lengths. Ideally the bank has high rates for a range of terms so you can build a CD ladder. Also check to see what penalties you’ll face for withdrawing CD funds early.

Deposit Insurance
Never do business with a credit union or bank that does not offer deposit insurance, or carry the FDIC or NCUA symbol. There are 2 types of deposit insurance: Bank deposits are insured by the Federal Deposit Insurance Corporation (FDIC) while credit union deposits are insured by the National Credit Union Association (NCUA). If a bank fails, the FDIC steps in and takes over. 
Loans:
Car loan. Find the bank with  low interest rates, prepayment penalties.  and origination fees.  Consider the various loan terms and how these fit your needs. Find low new car rates easily, but used car rates are not advertised as often.

Home mortgage loan. find for low interest rates, closing costs, origination fees or points,  and prepayment penalties. Consider the types of mortgages available.

Credit cards. Find for interest rates (best low interest APR credit cards), if you carry a balance, and rewards programs (best cash back credit cards). Always use credit cards and rewards wisely to avoid going into unnecessary debt.

Asset Growth Products:
Individual retirement agreements (traditional IRA) and brokerage accounts. Check for investment variety and fees. Can you invest in mutual funds,  bonds and individual stocks, and other asset classes? What does it cost to place trades?  How diverse are mutual fund options? Are there additional commissions charged on your purchase, such as front-end loads on mutual funds? 
Banks, unlike online discount brokers, can offer personalized one-on-one service when it comes to your investments, but keep in mind, you’ll pay for it.

Must-have technology
Does your bank account need a boost? Good technology can help you stay on track with your money. If you don’t want to step into a branch, you’ll need a bank with a mobile app that offers remote check deposits. Determining must-have features — such as the ability to transfer money easily to friends or loved ones, budgeting tools, automated savings plans or security measures — can help you narrow down the list of suitable institutions.

Where to look: Some credit unions and community banks may offer basic versions of some of these features. If you want the latest technology though, pick a national bank, online-only bank or mobile-only bank.

Bank Convenience
To make sure a bank would be convenient for you, find out about in-network ATM locations near you as well as any banking features you would use regularly, such as direct deposit. You’ll also want to make sure the bank account is user-friendly. For instance, you might want a bank with a decent mobile app so that you can access your account from almost anywhere with ease.
 Simple’s unique features make banking much more convenient. You can create savings Goals, which take money from your overall balance and hide it in digital envelopes. Your overall balance doesn’t change, but Simple adds a neat feature called Safe-to-Spend, which shows you how much expendable cash you have left over, once your Goals are taken care of.

To pick the best bank for your needs, get familiar with the options available, and then choose the institution best fits your needs.

No comments:

Post a Comment