Nowadays, choosing a bank that can give you what you need isn’t an easy task at all owning to the fact that there are more options on the market than ever before.
More banks cause more research, and some information is simply difficult to come by. As a result of the pandemic, it has become more difficult to assess and evaluate in-person banking services, with some branches being forced to close temporarily.
It also presents an opportunity — those who were not previously familiar with online banking may have done so during the pandemic, which presents an opportunity for them.
Opening yourself up to new possibilities in banking can cause significant financial gains over the long term.
It doesn’t matter which financial institution you choose; your bank of choice should meet your specific needs and be transparent about the policies that matter to you.
To find out what to look out for when choosing a bank, this article will serve as a guide. Carefully read through!
What Kind of Financial Institution Should I Use?
The good news is that there is no dearth of banking options available to you. There’s truly something for everyone on this list. The bad news is that deciding can be overwhelming.
While still a young adult, it can be tempting to use whatever bank your parents have available to you. As a member of the younger generation, it is critical that you select a bank that is compatible with your way of life and financial needs.
You typically have three options when it comes to banking: online banking, telephone banking, and postal banking.
1. A traditional financial institution
These are traditional brick-and-mortar financial institutions that typically have several branches. The “big banks” that you know and trust fall into this category, and they typically offer a wide range of financial products and services.
These traditional retail banks may also charge monthly maintenance fees, minimum fees, overdraft fees, and ATM fees on top of their regular interest rates.
2. A credit union is a cooperative financial institution
Instead of being privately owned, credit unions are non-profit organizations that are owned by their members. Credit unions operate in a similar manner to banks.
The products and services offered by credit unions are similar to those offered by banks, but they may be able to offer lower fees as well as higher interest rates than those offered by traditional banks.
3. A financial institution that operates online
Online banks are financial institutions that do not have physical locations but instead provide banking services through the Internet and your smartphone.
Given that these online banks save money by not having physical locations, many of them are able to offer higher interest rates on savings accounts and lower fees than traditional financial institutions.
You will be able to open a checking account with any of these options, and you will also have the option of opening a savings account.
How to Choose a Bank
When it comes to selecting a bank, there are numerous factors to consider. Many banks and financial institutions provide the same basic services, so it’s critical that you understand what characteristics to look for in a reputable bank or financial institution. Below are some questions to answer when choosing the right bank that can provide you with all you need:
1. Fees that are reasonable
I’m not even going to mention the overdraft fees, ATM fees, and monthly maintenance fees. These additional costs can add up over time, especially if you aren’t paying attention to your spending.
Keep in mind that traditional banks typically charge higher fees than online banks, owing to the additional costs associated with maintaining a physical branch location.
When looking for a bank account, it’s best to look for one that has low or no fees if you want to save money.
2. Savings rates of interest that are extremely high
Interest rates can make a significant difference if you want to get the most value for your money. Consider banks that offer High Yield Savings Accounts, which provide high annual percentage yields on savings deposits (APYs).
These may not appear to be significant at first glance, but even the smallest things can accumulate over time.
3. Online Accessibility that is User-Friendly
Money management and transfer capabilities that are simple and convenient to use online are essential these days.
You’ll want to look for a bank that has a user-friendly website as well as a mobile app because, let’s be honest, do you really want to go to a physical location every time you want to check your account balances and transactions?
4. High Levels of Protection
Given that your money is a tangible representation of your hard work, you obviously want to keep it safe. Investigate online reviews of the financial institutions you are considering, and make certain that they are insured by the Federal Deposit Insurance Corporation (FDIC).
Your balances are protected up to a maximum of $250,000 by the Federal Deposit Insurance Corporation.
If you decide to go with a credit union, make sure they are backed by the National Credit Union Administration (NCUA), which provides up to $250,000 in insurance coverage as well.
These certifications ensure that, in the event of a worst-case scenario involving your bank, you will receive complete and complete reimbursement of your funds.
- Access to ATMs
In the event that you require cash, will you be able to obtain it quickly? Ideally, you’ll want to choose a bank that has ATMs in your immediate vicinity.
ATMs are extremely convenient for getting cash when you’re on the go, but if they’re located outside of your banking network, many of them will charge you a fee. Choose a bank that has a large network of fee-free ATMs that are conveniently located near you.
5. Products and services
Deposit accounts, such as checking and savings accounts, are the foundation of any bank, followed by money market accounts, certificates of deposit, and loans, among other products.
While it is possible to open a number of onetime accounts in order to take advantage of the best rates available in each product category, this would not be very efficient.
It is possible to simplify your financial landscape by consolidating all of your accounts under one roof, such as savings, checking, and high-yield money market accounts,
6. Find a bank that is compatible with your way of life.
The bank you choose should be able to meet your requirements. In order to be successful as an entrepreneur, you’ll need a bank that will support your endeavors as you grow your company.
Consider using a bank that has features that will assist you in reaching your financial goals if you are trying to save more money.
Some financial institutions, for example, allow you to open and name multiple savings accounts. A savings account for your emergency fund, another for a travel fund, and a third for a gift fund are all examples of accounts you might have.
When deciding where to bank, it’s a good idea to take your spending habits into consideration. In many cases, financial institutions have budgeting tools built into their websites or mobile applications, which make it simple to keep track of your expenditures and see where your money is going.
In today’s hacker-friendly world, it’s impossible to be too cautious when it comes to safeguarding your money and personal information online. If a middle schooler is able to hack into your bank, none of the other features on this list will matter. If the security is lax, it’s a red flag that you should look elsewhere.
You should also make certain that your money is protected. The Federal Deposit Insurance Corporation (FDIC) and the National Credit Union Administration (NCUA) insure the majority of banks and credit unions in the United States (NCUA).
Both will ensure accounts up to a maximum of $250,000. That means that even if the bank goes bankrupt, you will still receive your money. Do not give your money to a bank or credit union if they are not federally insured.
It’s important to remember that banks make billions of dollars from charging people fees, finance charges, and penalties for borrowing their own money.
Maintain control over your money by choosing a bank you can trust, understanding the features you require and comparing prices.
It’s your money—and you’ve worked hard to earn it—so choose a bank or credit union that is right for you and your financial situation.
Which Bank is the Most Appropriate for Me?
After all is said and done, the best bank for you will be the one that provides you with the most financial peace of mind possible. A good bank that provides you with financial peace of mind is one that does the following:
- Don’t charge excessive fees for services.
- Allows you to have quick accessed to your money
- Provides competitive interest rates on your accounts.
- The bank offers convenient, user-friendly online and mobile banking services.
- Is trustworthy and dependable when it comes to your money
- Has excellent customer service skills
To make sure you’ve completed all the tasks on this checklist before deciding which bank to use, go through it one more time. When you reach this point, you will be prepared to make your final decision.
Checklist for Choosing a Financial Institution
Choose a bank account that is appropriate for your lifestyle and financial requirements.
- Examine the technologically advanced features that the bank has to offer.
- Ensure that you are familiar with the terms and conditions.
- Look into the banks you are considering by reading consumer and expert reviews.
- Identify the types of accounts, services, and features you are looking for and narrow your search.
What are the fees I should be aware of when selecting a financial institution?
Most traditional banks will charge you a variety of fees to keep your account open and operational. It is possible that your bank will waive or reduce your fees if you meet certain criteria, such as meeting and maintaining a minimum balance requirement or establishing direct deposits for your paychecks.
It’s critical to understand the fees that a bank will charge you for opening and maintaining a checking or savings account. Listed below are some of the most common bank feels that you are likely to encounter when shopping around for a financial institution:
- Monthly maintenance fees
- Overdraft fees
- Statement fees
- Stop payment fees
- Returned check fees
- Wire transfer fees
- Cashier’s check fees
- Certified check fees
- Out of network ATM fees
So, what characteristics should I look for in a checking account?
Before you open a checking account, take into consideration the following factors:
- Deposit requirements as a bare minimum
- ATM (automated teller machine) network
- Interest and rewards are two important aspects of a successful business.
- Features of a mobile application
Not to worry if you’re attempting to figure out how to choose a bank for the first time: help is at hand. The ideal bank for your needs is out there, just waiting for you to discover it.
Just keep in mind that before choosing a bank, read the fine print and make certain that you have complete control over your finances. Your bank should be considered an ally rather than a potential adversary.