How can you tell if a bank is right for you? Whether you’re opening your first bank account after finishing school or looking for somewhere to take out a mortgage, picking the right bank for you is vital. If you pick the right bank, it will support your financial goals as you move through life. If you pick the wrong bank, they may constantly ding you with fees for necessary financial transactions. If you’re considering your first bank or a new bank, keep reading to learn about some of the things you should think about.
- Focus on potential fees: Why pay $50 a year for a checking account? There are banks that offer checking accounts with no monthly fee. Banks charge fees for a variety of services. Whether selecting your first bank or a new bank, it’s vital that you’re aware of all the different fees they charge, especially for services that you use regularly. If they charge a high fee for some service you do use regularly, you could end up spending a lot of money unnecessarily.
- Think about how accessible your money will be: Do you plan on banking exclusively online? Even if you do, it might be worthwhile to ensure your bank has some convenient physical branches. Do you ever eat at cash only restaurants? If you do, and your bank doesn’t have any ATMs, you may end up paying quite a bit in ATM fees, both to your own bank as well as to the owner of the ATM.
- Make sure your bank meets your lifestyle needs: If you’re taking your first job after school, have an established career, or are about to become an entrepreneur, your requirements when it comes to a banking institution will be unique. You’ll want to find a bank that let’s you engage in the financial transactions necessary for your life without hassles or fees. For example, if you are becoming an entrepreneur, you’ll want a bank that can provide you with the necessary support while you grow your business. Other things to consider are:
- Overdraft Protection: If you expect to regularly overdraw your account, it may be cheaper to pay for overdraft protection than to be hit with a $25 fee a few times a month.
- ATM fees: Most banks charge a fee if you use your ATM card at an ATM that doesn’t belong to the bank. And most ATMs charge you a fee if you don’t use an ATM card associated with the institution that owns the ATM. If you’re expecting to use your ATM card in a variety of places, it may be worthwhile to find a bank that has numerous locations. Alternatively, you can join an all-online bank that doesn’t charge an ATM fee and reimburses customers ATM fees from ATM owners.
- Other benefits: Some banks offer a variety of other benefits to their customers. Frequently these are in the form of incentives for signing up. This could be things like an introductory interest rate, a cash incentive, or even something like a monthly credit to your account.
- Understand the bank’s terms and conditions: Have you ever been burned because you didn’t read the fine print? That can happen with banks too. Be sure to ask about things like monthly service fees. You’ll also want to be sure that your savings account is federally insured. This will protect your money in the event that your bank goes under. Another thing to look out for is teaser rates. It’s easy to get lured in by promotional rates that sound great, but they are much less exciting once they expire.
- Be sure that you’ll be okay if your needs change: When you open your first bank account, your needs are different than when you want to start saving for a house. Not every bank will have the versatility to serve you best as your financial life changes. You don’t need to find a bank that is perfect for you for the rest of your life. But you need to be with a bank that, if they can’t adapt to your changing financial circumstances, will be easy to remove yourself from when you need to find one better suited to your circumstances. For some people this means things like moving to banks with no minimum balance fees so they can create multiple savings accounts for each of their financial goals, down payment, vacation, emergency fund, etc.
- Get a feel for their customer service: This can be more difficult without actually having an existing account with the financial institution. That said, you can probably find reviews of both the bank and their customer service experience online. It’s important to do this because you never know when you’ll need to call or visit the bank to have an issue resolved. Financial problems are generally stressful to begin with, so the last thing you need is to be given the runaround by customer service.