How to Choose a Bank: The Complete Guide

There is an infinite number of choices available to us in life. We must choose a place to live, a home to purchase, a spouse, and a bank. However, selecting a bank is less stressful than selecting a partner or a home, but it is not easy. Keeping your cash in the wrong location can be costly.

Consider the following advice before committing to opening an account to ensure you’re making the right decision. This article covers the complete guide to how to choose a bank, with many bonus tips and motivating money quotes. So, keep reading to the end.

How to Choose a Bank

Here is the tip:

When it comes to financial institutions and the breadth of goods and services they provide, the possibilities are limitless. But how do you pick between national banks, credit unions, community banks, and banks that operate entirely online?. One thing first, you must recognize the facilities and features that are essential to you.

Well, Keep reading to understand some important things to add to your checklist when choosing a bank.

It’s important to choose a bank that suits your lifestyle and meets all of your financial needs and objectives. While the majority provide similar services, there are distinctions between goods and policies that can have a significant effect on their suitability for you. When choosing a bank, the primary considerations are the institution’s form (online, regional, credit union, etc.) and associated fees. To begin the process of choosing a bank, you should determine what is most important to you as a customer.

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If you’ve determined the type of bank in which you wish to do business, you can restrict your options by reviewing factors such as interest rates (the higher the better) and fees (the lower the better). Savings accounts earn an average interest rate of 0.01 percent while checking accounts earn an average interest rate of 0.01 percent. Use these as a guideline when choosing a bank. Below, we discuss fees in greater detail.

Money Quote: Poverty is not the lack of money, but, it is the lack of ideas…

Chiemerie Ozurumba

Consider The Following When Choosing A Bank

Determine the type of account you need

Banks have a diverse range of goods and services. Attempting to compare them all at once can seem daunting. A good way to begin is by determining the type of account you wish to open in light of your financial objectives and priorities.

If you want to increase your savings, you can open a high-yield online savings account. The Federal Reserve has already cut interest rates twice this year, and several banks have reduced the yield on savings accounts. However, as opposed to brick-and-mortar banks, online banks continue to deliver favorable rates.

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Perhaps you’re in the market for a checking account replacement. If that is the case, you might want to consider a larger, more conventional bank that offers a variety of checking account forms. Alternatively, you may wish to open a high-yield checking account, such as those provided by credit unions and community banks. Money market accounts, hybrid accounts that allow for check writing rights but have a monthly transaction cap similar to savings accounts are another choice, but not all banks offer them.

However, when conducting your analysis, understanding what you want from a bank will assist you in narrowing your list.

Concentrate on the numbers

Do you despise squandering money? Locate a bank that does not charge excessive fees. “Why would you pay $100 a year for checking, savings, and basic banking when you can get it for $30, $5, or even free?” According to Douglas Boneparth, a certified financial planner and president of Bone Fide Wealth, a financial adviser company based in New York City. Meanwhile, due to the fact that online banks have few (if any) physical locations, they have lower operating costs. That is why they typically charge less in fees than traditional brick-and-mortar banks.

However, monthly maintenance costs, ATM fees, and the expense of overdrawing a checking account are all fees to be aware of. According to Bankrate reports, the average overdraft fee in 2019 is approximately $33.36. Also enrolling in an overdraft insurance policy (in which the bank covers an unaffordable purchase) can be costly. According to the Consumer Financial Protection Bureau (CFPB), those who enroll in overdraft protection pay about seven times the fees as those who do not.

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When choosing a new bank, look for one with more lenient overdraft policies. Meanwhile, once you’ve discovered your ideal account, follow these steps:

  • Connect your checking account to another account at your financial institution so that if your checking account runs out of money, the bank will withdraw funds from the other account to cover the transaction. This incurs a fee, but it is usually less than the overdraft fee.
  • Register for low-balance warnings on the website of your bank or credit union. These warnings, which you may obtain on your mobile, will notify you when your account is at risk of being overdrawn.

Consider accessibility

Another important aspect of banking is accessibility. However, the majority of customers would consider the convenience of ATM locations, branch locations, and the availability of online and mobile banking. Moreover, the most important characteristic varies, especially by generation. For younger customers, mobile banking capabilities outweigh the convenience of branch locations. For older bank customers, the reverse is true.

Nonetheless, branches continue to play a part in the lives of the majority of Americans, with 78 percent reporting that they opened their most recent new account or product in person at a branch. Additionally, their data shows that the most common reason consumers choose their primary financial institution is for convenient branch locations.

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What is the takeaway? Even if you want to conduct almost all of your banking online, you will want a bank with some physical locations.

Credit unions should not be ruled out

The largest banks are well-known to the majority of customers. However, you should shop around and suggest credit unions as well. Possibly, it can take some time to learn about the services offered by local credit unions. However, conducting some research could prove beneficial.

“By not having shareholders, credit unions will reinvest their profits in the form of lower, reduced loan rates and higher interest rates on savings,” explains Jaspreet Chawla, Navy Federal Credit Union’s vice president of membership. Nonetheless, this establishes a special relationship that typically results in increased opportunities for participants to participate in and influence organizational decisions.

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Joining a credit union is no longer as challenging as it once was. Numerous chapters are located across the country, and many apply for membership simply by being a member of an association such as the American Consumer Council.

Choose a bank that is a good match for your lifestyle

The bank you choose should be a good fit for your circumstances. If you’re an entrepreneur, you’ll want a bank that will help you as you grow your company. Likewise, you’re looking to increase your savings, Ben Brown, the founder of the investment advisory company Entelechy, suggests finding a bank that allows you to open and name separate accounts.

“Typically, I advise clients to open a primary checking account that serves as a clearinghouse and then several savings accounts for various goals,” Brown explains. “You could create a travel fund, a gift fund, and a daily expense fund to simplify budgeting. However, consider your spending habits as well when selecting a deposit. Numerous banks incorporate budgeting software into their websites or mobile applications, making it simple to keep track of your spending and see where your money is heading.

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Consider the safety of your funds

You have insurance to cover your health, your car, and your house, and you should also have cash insurance. Look for banks that are insured by the Federal Deposit Insurance Corporation (FDIC) or credit unions that are insured by the National Credit Union Administration (NCUA). Both federal agencies insure bank and credit union deposits up to $250,000.

What to look for: The majority of banks and credit unions are insured. You will determine if your organization is protected by the FDIC or NCUA by visiting their websites.

Analyze technical capabilities

According to McAdam, the majority of banks provide basic services through their mobile and online platforms, including the ability to move money, pay bills, check balances, and deposit checks via mobile. However, not all banks have sophisticated digital capabilities. Some banks are lacking functionality that customers are increasingly demanding, such as the ability to lock a debit card (and prevent it from being used by a stranger). As well as handle mobile banking alerts. Meanwhile, certain online banks do not deliver a mobile app.

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Recognize the terms and conditions

You can not open a bank account until you understand the fine print. If there are monthly service fees, inquire about the possibility of having them waived. If your bank charges you for using an out-of-network ATM, inquire about refunds. Meanwhile, ascertain that your funds are guaranteed by either the National Credit Union Administration or the Federal Deposit Insurance Corporation (just in case your bank closes).

Finally, when comparing CD prices and other items, keep an eye out for expired promotional offers. “Teaser prices or similar products, these are usually attractive in the short term,” Boneparth explains. However, in the long run, it costs you money.

Complete your homework before making a move

You don’t want to join a credit union or become a bank client without fully understanding what you’re getting yourself into. Once you’ve narrowed your search to a few banks, hear what experts have to say about them.

Determine where your preferred bank stands in terms of customer service and whether you are the sort of person who will benefit most from their offerings.

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Consumers typically remain loyal to their banks for an extended period of time. Before deciding to begin a partnership with a specific bank, it is prudent to carefully consider your options. If you’re having difficulty deciding on a single bank, consider whether you can manage accounts at many separate institutions that can help you remain on top of your finances collectively.

Money Quote: Don’t settle for failure when you make some money moves, you can fail an attempt, that’s just fine but never settle for the less; Always remember, as much as success is free, the lane will always be tough. Just keep moving forward …

Chiemerie Ozurumba

Conclusion

Choosing the right bank is a personal choice, and it will not be the only one. After selecting a bank, you must choose the accounts that will accompany it. However, decide what is important to you and weigh your choices. If you do business with another bank, you can change banks. Meanwhile, browse the bank or credit union’s website, pay a visit to a branch, and solicit suggestions from family and friends to help narrow your choices.

Chiemerie Ozurumba (Adorablepen) is a freelance writer, with a Degree in Computer Science & Programming. He is also a personal finance expert, blogger, public speaker, and poet. He has written so many amazing & creative scripts, articles, quotes, long & short stories, and poems to his credit. He is also a relationship, love & life coach.

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