Deciding on which financial institutions will keep and manage your money is one of the most important choices you will make. This is because they are going to serve as representatives or agents between you and your money. The decision changes from time to time as your financial well being improves. For that reason, choosing the best banking partner can be an additional skill for your financial resourcefulness.
There is neither a limit as to the number of bank accounts you can open and the banks to hold it from, nor how often you swap between banks. This guide looks at the 4 crucial factors to consider in choosing the right bank to go on a ride with.
1. Determine The Type Of Accounts That Suits Your Need
There are different accounts for different banking purposes. You need to determine which of these account types goes with your immediate or future purpose.
- Checking Accounts are for keeping money you’ll need on a regular basis for purposes such as paying off your bills, receiving automated payments like salary and wages, writing checks, as well as covering expenses with a debit card and withdrawing money from an ATM..
- Saving Accounts are primarily opened for savings in the short run – say 5 years whilst earning interest on them. This account is limited to a stated number of withdrawals you can make on them per month and works great for emergency funds or saving to buy a home.
- Certificates of Deposit (CD) holds a fixed amount of money for a fixed period of time, like six months, one year, or five years, and in exchange, the issuing bank pays interest. When you cash in or redeem your CD, you receive the money you originally invested plus any interest it bears.
- Money Market Account is a unique savings account that generally earns you a higher savings rate than traditional savings accounts. It may offer some check-writing and debit card options too.
2. Consider Extra Banking Features
This might be in the form of the bank’s physical locations, availability of online banking services, credit card options, loans and mortgages, ATM networks, banking perks, customer support, etc.
Banks are not all structured the same. They have features and additional services that are exclusive to them and their customers which they tend to prioritize. These extra features might be exactly what you’re looking for. For example a mobile app that gives you accessibility to your account wherever you are without the need of searching around in an attempt to locate a branch in every new neighborhood.
3. Compare Different Accounts
It’s important to do some research on the type of product and features offered by different banks. It helps in drawing up the differences and narrowing down your results. Comparison websites are a good tool for if you want to find an account to your needs. They allow you to view all the fees and charges such as overdraft fees and foreign cash withdrawal charges that apply to bank accounts. Top comparison sites available in the US are those provided by NerdWallet, Credit Karma, Bankrate, WalletHub and ValuePenguin.
As these sites are only a guide and not the ultimate decision factor, a method you can use to supplement are online reviews and customer feedback of banks and credit unions. They can give you a closer look at the pros and cons of every bank and whether they’re worth all the hype.
4. Choose Your Ultimate Banking Partner
Once you’re comfortable with all the information you have on your table, it’s time to settle on a partner. The decision might be influenced by your preference in a bank with physical locations, those whose services are entirely online or the ones that have both
- Physical or Brick-And-Mortar banks have their services fully in-house and require customers to walk into a building and speak to a banker directly.
- Online or Digital Banks have their services from account opening to customer support services fully online, either via web browsers or mobile apps. Typically, they charge low fees and pay high interests
- Hybrid banks offer digital and in-house services to create a customer-centric banking ecosystem. This system allows you to access banking services no matter which method you choose to use.
Not popularly mentioned is the insurability of the banking partner you choose, whether it’s a physical or digital bank. This shows to what extent your money or savings is secured in case something out of the ordinary happens or the bank shuts down. Credit unions are to be insured, licensed and supervised by the National Credit Union Administration (NCUA). Banks are to be insured by the Federal Deposit Insurance Corporation (FDIC). Online banking platforms have partner banks that provide insurance, so you should still see a note such as the familiar FDIC logo or the words “Member FDIC” or “FDIC Insured” on their websites.