Which Bank and Bank Account Should You Choose?

Which Bank and Bank Account Should You Choose?

If this is your first time opening a checking account or if you've recently relocated to a new location and need a new bank, you may be thinking about where to bank and what kind of bank account would be most suited to meet your individual requirements. While some people opt to maintain accounts at a number of different banks in order to keep their personal and professional expenditures distinct, others prefer to keep all of their financial dealings within a single institution for the sake of convenience. You do not require a cause to investigate banks and the services they provide; nonetheless, giving serious attention to your requirements and way of life might assist you in making an educated choice.

Making a Decision Regarding Which Bank to Use

When selecting a financial institution, take into account the factors listed below.

Investigate the various kinds of banks

The most suitable institutions for day-to-day banking are retail banks, which provide customers with the most fundamental banking services. If you want an institution that has a physical presence, you can select a classic brick-and-mortar bank from this group. On the other hand, if you're more tech-savvy and don't need to visit a real branch, you can select an online bank instead. You might also qualify to become a member of a credit union, which is an organization that operates on a not-for-profit basis and caters to the monetary requirements of people who have a common employer, professional interest, or labor union. 

Choose the appropriate dimension

Large retail banks are frequently household brands in the banking industry and have a tendency to have locations all across the United States, which is an advantage if you travel a lot for work or vacation. Large retail banks also tend to have more competitive interest rates. You will have an easier time accessing your money while you are gone, and you may be able to avoid costs that are charged by ATMs in other countries. If that is not the case, you might discover that the goods and customer service offered by a smaller bank is more suited to your needs. For instance, community banks accept deposits and make loans in the immediate area, which results in more personal interaction between you and your bank. 

Reduce the scope of your location

If you decide to go with a traditional bank, you should find the location of the branch and ATM closest to you, as well as the larger service area. In the event that a financial crisis befalls you, the last thing you want to do is have to go a great distance to collect cash.

Look around for products and services that are suitable

The majority of retail banks allow you to open not just basic bank accounts but also checking and savings accounts, credit cards, loans, and safe deposit boxes in addition to the basic bank accounts. Some financial institutions go above and beyond the fundamentals by providing cutting-edge capabilities such as smartphone applications. If you're frequently on the move, it's important to find a bank that meets your unique needs. Your current and future requirements should eventually be met by the services provided by the financial institution in which you bank.

Recognize the financial implications

When customers use their bank accounts, they are subject to a variety of fees, including monthly maintenance fees, fees for overdrafts, and fees for wire transfers, to mention a few. These costs are imposed by a variety of financial institutions, including large and small banks as well as credit unions; however, they are often lower at online banks and credit unions. Compare the fees and interest rates offered by various financial institutions before settling on one to do your banking with.

Calculate the amount of interest

There are some accounts, such as savings accounts, that accumulate interest on the balance over time. The interest rate that is paid on accounts often is higher with credit unions and online banks. 

Choosing the Right Type of Bank Account to Start With

Follow these guidelines for account selection once you have chosen a financial institution to bank with.

Set a goal

The type of bank account you should open will be determined by the reason you want to open an account in the first place. For instance, you may wish to pay your bills by check or establish an emergency fund in order to protect yourself financially in the event that you suddenly find yourself without a job or face an unexpectedly high medical bill. You could wish to put money down for a goal that won't be reached for a long time, such as a down payment on a house. Determine the specific reasons behind your desire to conserve money.

Create the appropriate kind of account

Choose a bank account that can help you achieve your objectives. You might, for instance, decide to open a checking account or savings account for your day-to-day banking needs, a money market account for your emergency fund, and a certificate of deposit (CD) for your long-term requirements. When you open a checking account, you should also consider opening a savings account at the same time if you can manage it. If you do this, you will be able to link the accounts, transfer money between the accounts either manually or automatically, and make it much simpler for you to save money on a consistent basis.

Be wary of any limits placed on your transactions

There is a monthly cap of six withdrawals or transfers that can be made from savings and money market accounts. Checking accounts have fewer limitations than savings accounts, although some may impose a daily cap on the amount of money you can take from an ATM or make purchases with a debit card. It is recommended that you open a bank account with a higher daily spending limit if you frequently make purchases that are greater than that limit.

Consider the various costs involved

Different types of accounts have different fee structures. To evaluate whether or not you will be able to afford the monthly maintenance costs, early withdrawal penalties for certificates of deposit, and any other fees associated with the bank account you are considering, visit the website for the bank. It is still possible to open a free account, which refers to an account that does not require a monthly maintenance charge, and it is in your best interest to do so if you want to keep your banking costs to a minimum.

Determine the needs for the bare minimum of equilibrium

This is the typical minimum amount that you need to retain in a single bank account that charges a monthly maintenance fee or in total deposits at the bank in order to avoid having to pay the cost every month. If you want to avoid paying maintenance fees, which can run anywhere from $25 to $10,000, the best way to do so is to select an account with a minimum balance requirement that doesn't put undue strain on your finances. If your typical or typical average balance in a bank account is low or about in the middle of the road, you might be better suited to opening a free bank account. If you are a senior citizen, receive a particular amount of money in direct deposits into your account within a statement period, have other products open with the bank, or get certain types of direct deposits, many banks will waive your monthly fees.

Be sure to read the small print

To ensure that you are familiar with the policies and procedures of your new bank and bank account, it is important that you read any pamphlets that the bank sends you as well as the agreement for opening an account. Some accounts impose daily limits on the amount you can spend using your debit card, and others restrict the number of free checks you can write during the course of a billing cycle. In a similar vein, the bank might have its own particular guidelines concerning when funds will become available for withdrawal and how to put a hold on the payment of a check. If your bank gives you the ability to manage your account online, reading the terms and conditions is even more important than usual because a lot of the convenient options are covered by the services that are offered online. There is a possibility that there will be a fee associated with using online banking or paying bills, for example. Ask inquiries if you are unsure what a policy means or how it will impact you before you create an account at a bank if you are unsure what a policy means or how it will affect you.

What to Do in the Event That Your Application Is Refused by the Bank

Because banks don't want to lose money any more than other businesses do, they may decide not to do business with you if they consider you to be a high-risk customer due to your poor banking history. This decision may be based on the likelihood that you will continue to make payments on time. ChexSystems is a reporting agency for consumer banking activities, and the majority of banks will check your history of bank account activity and account closure with this agency.  If you have a history of overdrafts or, even worse, if another bank terminated your account because you wrote bad checks, you may have problems creating a new account. This is because banks do not like to see customers with negative credit histories. It's possible that the only account you'll be approved for is a "second-chance" account, which doesn't require a look at your ChexSystems report. You will presumably be required to pay fees that are higher than the norm for these accounts; however, if you maintain good financial behavior over a set period of time, you will typically be able to "graduate" to a standard bank account.  If you apply for a bank account and your application is turned down, the bank is required by federal law to provide you with an adverse action notice that identifies the entity that provided the negative information that resulted in your application being turned down. It is imperative that you go over this notification and get a free copy of your ChexSystems report within the first sixty days of getting the notice in order to gain insight into the considerations that went into the bank's final decision. In this way, you will be able to take measures to remedy harmful banking behaviors and ensure that your subsequent application for a bank account will be approved.

Leave a Reply