Whether you’re just starting out or looking to change banking institutions, it’s important to know what makes a good bank.
At the end of the day, all banks want your business and sorting through all the options can be overwhelming.
If you’re wondering how to choose a bank that will be perfect for you, here are some things to consider.
A Bank’s Job
The primary purpose of a bank is to secure your money and make it grow. If you’re keeping your cash in a piggy bank (or envelopes, a safe, and under the mattress), it’s not as safe as if it were kept in a bank. More importantly, it hasn’t been earning interest. When you deposit money into a bank, the account earns a percentage of interest which is added to that same bank account. It’s yours to keep! So look for banks that will offer a competitive interest on checking accounts, and that’s a great way to start the selection process.
There is one caveat, however, and that is the existence of monthly fees you might be charged to keep that high-interest account operating. Does the difference between the awarded interest and the fees mean you’ll still come out ahead each month? Here’s a quick comparison to help you decide.
Your Job
Someday, you’ll want to buy something that costs more than whatever you have in that account. Whether it’s a home, vehicle or small business, you’ll need to borrow cash, and your bank will be there to offer the service of loaning you the funds needed. When you enter a loan agreement with any bank, your job will be to make their money grow by paying the cash back slowly, over time, and with you guessed it – interest. This time you’re shopping for a bank with the lowest interest rate, since now, you’re the one paying that interest.
As with checking and savings accounts, credit accounts may also have surprising monthly fees, maintenance charges, or hefty fines, so be sure to read all the fine print before choosing one lending bank above the other.
Other Factors to Consider
Exploring interest rates and the fees associated with each kind of account will be the best approach for how to choose a bank… at first. But you can’t decide which one is best for you on those criteria alone. You’ll also need to know information about each institution.
- Where are branches and ATMs located? Are they convenient to your home or daily commute? Some banks don’t have branches at all, and are 100% online. Would that be worth better rates to you?
- Is the bank reputable? Be sure it’s on the FDIC’s website, and has a record of good standing.
- Are the bank’s hours compatible with your lifestyle?
- How do the bank’s employees treat you when you’re in the researching stages of choosing a bank? How do the bank’s’ employees treat one another?
- Does the bank exist primarily for millionaires and billionaires? Some institutions cater specifically to people who need help managing their copious wealth. If that’s not (yet) you, feel free to keep shopping.
- What are the strings attached to promotional products? If a bank is offering a cash bonus for opening an account, for example, do they require you to keep a certain balance?
If you ask yourself – and your potential bank – these questions before signing on, you’ll be starting a relationship with the best bank for you and your needs. If you already have numerous accounts open and struggle to manage all of them, call a non-profit financial counselor today to simplify.
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