Your choice of bank is crucial for your personal finance management and savings growth. When choosing a bank, consider the interest rate for savings accounts, customer assistance services, additional fees, and the availability of online and mobile apps.
Let’s take a closer look at these criteria.
Interest on Savings Accounts
Don’t be swayed by the glossy advertising of most major banks. They show idyllic images of people relaxing in parks, riding bicycles, and looking secure in the knowledge that they have enough savings to last them throughout their retirement. It is an achievable goal, but one that’s honestly impossible to achieve if you only get 0.19% interest on your savings account.
If you want to get the most out of a savings account, find a bank that offers 1% interest or higher. That gives you at least $200 if you save $20,000 in one year. Consider also online banks if you’re after high-yield savings accounts.
Service Fees and Penalties
Many banks impose monthly or annual fees for certain types of accounts. While that can be acceptable for foreign currency accounts, it is no longer the norm for checking accounts. Avoid banks that charge you $10 a month for checking accounts — that’s absurd considering other banking institutions can offer the service free of charge.
Two things you can’t avoid as easily would be maintaining balance requirements and overdraft fees. Many banks who waive the monthly service fees require a maintaining balance. As for overdraft fees, it is a protection that banks impose.
If you write a check or make a transaction without sufficient funds in your account, banks can approve the purchase and charge you an overdraft fee ($34 on average; anything higher is too expensive), or decline it and still charge you an NSF (non-sufficient funds) fee. For these staple terms, find a bank that offers the lowest rates and balances.
The advantage of choosing a large bank is that they have robust customer service. They have the infrastructure for phone, email, and in-branch correspondence. Also, there’s a good chance that other people already raised a concern you may have. You can research about it on the Internet and find answers and advice from others who’ve had the same experience.
On the other hand, the presence of customer service doesn’t always guarantee satisfactory service. Large banks have a unique disadvantage: many of their branches get crowded, and transacting in-bank can test your patience; it is unusual to see this with smaller banks. Read up on customer reviews and decide which qualities are most important to you.
Online, Mobile, and ATM Banking
Convenience is the new standard for competition among banks today, and those that offer online and mobile banking have a significant advantage. Millennials look for these services, and for excellent reasons.
Remote banking enables customers to make transactions without having to visit a branch. They can check balances, send money, or buy online even beyond traditional office hours. Choose banks that offer these and other services like low balance alerts and transaction notifications through text and email.
ATM banking is also an advantage. It’s a lifesaver when good Internet connection is difficult to come by. It’s best to find a bank with an extensive network of ATMs, preferably in the areas, states, and countries you frequent. Just don’t forget to check the ATM fees. If you withdraw money using another bank’s ATM, that bank and your bank could charge you between $2.00-3.00 each.
If you’re not in the habit of withdrawing using another bank’s ATM, this fee won’t matter; but if you do, choose a bank that charges the bare minimum. Better yet, choose a bank that offers free non-network ATM transactions and unlimited fee reimbursements.
If you are a young adult still in the process of selecting a bank, I urge you to do it the way you would shop for a car. Compare fees, minimum deposits for opening accounts, maintaining balances, customer service, loyalty perks, and so forth. Also, consider your future banking needs.
For example, if you plan to buy a house, go with a bank that lets you link your checking account to a savings or credit account. It can save you from accidental overdraft charges and help you pay your dues on time.
If, after reading this article, you find that your bank is falling short of modern banking standards, consider switching to another one that meets your needs and offers you more.
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