Learn about the types of banks, related fees, and financial products, list down the services you require, and thoroughly check their policies.
Banks are important financial institutions that can be used for multiple purposes. At some point, you will find yourself sticking with one or two selected banks so it is important to choose the right one.
It is safe to assume that most banks offer similar benefits and services but there are some significant differences. Differences like location, type, and associated banks can have a major impact on deciding which one you should choose.
In this article, we will talk about the key factors you need to consider while choosing a bank.
1. The Different Types Of Banks
The type of financial institution can influence your accessibility and also the range of services. Banks can be divided into few categories like International, National, Regional, Online-only, and Credit Unions.
National banks have the most number of ATMs and physical locations out of all the financial institutions. It doesn’t matter where you live, you will always find a branch of these national banks close by.
Citi bank is one of the most favored national banks and they have branches almost everywhere. You can visit https://usa-banks.info/citibank/ to check out the nearest branch.
People who move around a lot will find it comfortable having accounts in national banks because of its availability.
As there are so many national banks that have thousands of customers, these banks offer the lowest interest rates.
Credit Unions And Regional Banks
Due to having lower numbers of customers, the regional banks offer a competitive interest rate which is good for you.
But if you are traveling it is best not to deposit or withdraw money through a regional bank because of the unavailability of a branch. You will also have to close your account if you decide to move out of that area.
Credit Unions are cooperative institutions that, most of the time, offer better interest rates than average banks. To receive the service of a credit union you first have to become a member of it.
There are specific criteria that allow you to be a part of it. Information such as employment history, present location, and membership to a trade union. Credit unions also have location constraints.
These banks offer the highest interest rates. If you are someone who does not need to carry cash all the time then online banking can be an ideal choice for you.
But if you are dealing with complicated financial products and want more face time with the banker then online banks are not the right option.
2. Services You Might Need
Banks always create new schemes and financial products to attract customers. Their main selling point is the service they provide.
The best thing to do is to list out the services you think you need and then crosscheck it with other banks by visiting their website.
Here is a list of services you might need
- ATM facilities
- Direct Deposit
- Debit, Credit, and check cards
- Mortgage and loan facilities
- Mutual funds and stock investment opportunities
- Traveler’s check
- Overdraft protection
- Retirement planning
- Wire transfers and online banking
Choosing the right financial institution can even help you in severe financial problems like bankruptcy.
3. Different Types Of Fees
Before choosing a bank you should always study their fees schedule. Banks may not always be willing to disclose all their charges and fees. Some hidden charges may sound small but continuous and unexpected expenses over time can drain your savings.
The most common fees are ATM fees, Account maintenance fees & overdraft fees.
- ATM charges
Your bank’s ATMs will not charge you but ATMs from another institution will charge you every time you withdraw or deposit money.
Some banks do not charge non-native fees meaning that the customer will only have to pay the withdrawal fee and no additional charges. Some banks also offer special services to
- Account Maintenance Charges
Different banks have different maintenance fees. It also depends on the type of account you hold. Some bank provides the opportunity of waiving the monthly fee if you have a certain amount of deposit in your account.
There are also accounts like student accounts that do not require maintenance fees at all.
The average monthly fee for saving accounts can be up to $6 and for checking accounts it can be up to $8.
- Overdraft Charges
If your withdrawal amount exceeds the current balance available in the account you will be charged an overdraft fee.
These are the highest fees any bank will charge. Some banks charge $30-$35. Some banks may charge less like $20 but it is still more than the above-mentioned fees.
Considering all these fees are extremely important if you are looking to open a business bank account.
4. Loans & Financial Products
Banks allow loans to overcome difficult scenarios. It helps you organize your present financial situation but banks are also equipped with the ability to keep your future safe.
Banks primarily make their money through mortgages and loans. If you can become a trusted customer, you will get good deals on these rates.
Some banks offer amazing rates for their loyal customers. But for that you will need to find the right bank; a bank you can trust.
Take a look at the interest rate they are offering. If you want to make a big purchase soon, you are better off with credit unions than national banks.
Remember to calculate APY or annual percentage yield instead of the annual percentage rates.
5. Learn About The Policies
Banks only advertise their services which is just the tip of the iceberg. The hidden features lie in the fine print of their policies.
Always consider learning more about these policies. Banks can sometimes create barriers between you and your money and instead keep their investors happy.
Keep track of your balance using online and mobile balance checks and make sure you are free from false overdraft charges and miscellaneous expenses.
Choosing the right bank will come in handy in increasing wealth and keeping your financial status stable. So take your time and do proper research before deciding where to open your accounts.