Trusting someone with all your hard-earned money is difficult. People work hard all day for a living. They wish to save this money in a secure account where they can access it at any time, earn significant interest on it and get different services for the ease.
Choosing the right bank is an important task and should be done after thorough research. This is because every person has different plans for what they need to do with their money. Ideally, the best bank would change their services according to your needs. Realistically speaking, you will have to switch between financial institutions according to your requirements. Luckily, there is no limit to how many accounts one can hold.
That said, the steps for picking a bank are pretty simple, and once you fully understand them, you can go through this process without any help at any time.
Here are the steps for choosing the right bank:
1. Determine Your Needs
Firstly, you must determine what your purpose is for opening an account. Banks offer different accounts that people choose according to their needs. Here are some basic ones:
Checking Account: If you plan to withdraw and use your money regularly, a checking account will be an excellent option for you.
Saving Account: Many people wish to keep their money in a secure place so they may use the money when the need arises. Usually, the funds are kept in the account for an extended period since the purpose is to save. Additionally, the banks also yield interest on the funds in your account. Hence, it is a good way to ensure your money is not losing its value sitting in the bank.
Money Market Account: This account also serves the purpose of saving. However, the difference is that banks provide a few easy ways to access your money, such as a debit card or a checkbook. Also, you have a specific withdrawal limit since the primary function is to save funds.
Certificates of Deposit: When you open a CD, you are depositing money in a bank for a certain period. A fixed rate of return is provided to the account holder. Many people prefer a CD over a saving account because the interest rate is fixed.
As you can see, every account is different. Hence, it is essential to determine why you are opening an account when picking a bank.
2. Type of Bank
Thanks to technology, today, you can choose whether you want to indulge in online banking or prefer brick and mortar and the in-person experience it offers.
An online bank offers multiple digital features, and you do not have to visit the bank branch for every little problem. However, it does lack the personal touch because you cannot address the management in person.
On the other hand, people find banks with a physical location more trustworthy and secure. Today, most banks offer digital convenience. However, unless your brick-and-mortar bank is nearby, it can get inconvenient to drive to your bank for minor issues can be problematic.
This is why choosing the right bank is essential, so consider your options carefully and decide what suits you best.
3. Compare the Fee and Services
Not all banks offer the same features, and neither do they charge the same fee. Typically, banks charge an overdraft fee, service fee, monthly maintenance fee, etc. These cuts are made from your funds in the account.
Furthermore, traditional banks tend to charge multiple fees, while online banks offer a comparably low fee, and some do not charge at all.
The varying fee will help in picking a bank by narrowing down your choices to banks that won’t make too many deductions in your account.
Besides this, banks offer different features and services to account holders for convenience and ease. For instance, banks may offer:
- Security through insurance
- Multiple branches
- Online banking (traditional banks may offer this service)
- Financial planning
- Borrowing (Loans)
- Mortgages
- Credit cards
- Debit cards
- Investment account
Knowing about these services and features will make the decision easy, and you will be able to make an informed choice.
4. Compare Interest Rates
An excellent way to distinguish between banks is to compare their interest rate. The best bank would offer a high interest rate. Since all banks have varying rates, it is good to dig deep and compare all banks to ensure you are choosing the right bank. Moreover, it is important to note that online banks offer better interest rates than traditional banks.
Basically, interest rates are just a way to earn a buck or two on your money. It may not be an essential factor for you. In that case, you can compare your choices as per your priorities.
5. Pick Your Preferred Institution
Most people are unaware of the multiple choices they have for opening an account. You can open an account in a traditional bank, credit union, or banking platform. Now, you might be wondering about the differences so let’s have a look at them individually and decide which is the best bank for you:
Traditional Banks: Traditional banks are commercial and have multiple brick-and-mortar branches to provide convenience to their customer. Typically, traditional banks have a high fee and low interest rates.
Banking Platform: Online banks provide digital platforms with low or no fees and high interest rates. They have become pretty big competitors for traditional banks. The only drawback is that customer service can be frustrating at times since you cannot discuss your issues in person.
Credit Union: Basically, credit unions are nonprofit banks. All profits return to the customer in the form of high interest rates, low service, and borrowing charges. Since they are nonprofit, they give back to the community as well. However, they may lack in proving some services and features.
Conclusion
Ideally, the best bank would understand your needs, have a low service charge, high interest rates, provide convenient access, and have straightforward policies.
That said, we must also understand that it is highly unlikely that you will find everything in your favor. You may have to compromise on a few things. Hence, it is essential to prioritize and figure out what features you can let go of.
Choosing the right bank by following this method will lead you to the right choice as per your needs.
Additionally, you can always mix up the steps according to your priorities to make the right choice.
