Dedicated to Deposits: Deals, Data, and Discussion

10 Things to Look for In a Bank


10 Things to Look for In a Bank

You wouldn’t know it from many bank policies, but we are actually doing banks favors when we deposit money with them. Having deposits means that banks have capital that they can lend out to others to make money on, via interest. Yes, the bank pays you interest on some accounts, but the meager interest you receive pales in comparison to the interest that banks receive when they lend money out to others. It’s one of the ways that banks make money.

Because you are in a relationship that should be mutually beneficial with banks, you do have the right to demand something a little more from your financial institution. If your bank isn’t delivering, you can move your money. Here are 10 things to look for in a bank:

1. FDIC Insurance

You want to make sure your money is safe. Currently, the Federal Deposit Insurance Corporation will guarantee the money in deposit accounts for up to $250,000. (On January 1, 2014, if nothing changes, that amount will drop to $100,000.) This means that if your bank fails, you will get your money. It’s a good idea to check your bank’s health anyway, though, because in some cases it can take weeks for things to get straightened out after a bank failure. So, while you will get your money, it could take quite some time to access it. If you use a credit union, the NCUA offers similar protection to the FDIC.

2. Reasonable Fees

Find out what fees are charged by the bank. Some banks refund ATM fees, and others simply charge you every time you do anything. Find out about monthly maintenance fees and other fees that your bank may charge. Look for a financial institution that charges little to no fees. For instance, while a small ATM fee may be reasonable, it is rarely reasonable for a bank to charge a maintenance fee. Look for a bank that charges low fees, and doesn’t pile them on.

3. Low Minimum Requirements

Find a financial institution whose minimum requirements are fairly low. Some bank accounts will charge a fee if you drop below a certain minimum. While this is reasonable for a money market account, a standard checking account should have no minimum deposit requirement. Shop around until you find a financial institution that offers a range of accounts with no minimums.

4. Customer Service

Don’t underestimate the importance of good customer service. You want to feel somewhat valued by your financial institution. Are the tellers friendly? Can you make an appointment with the bank manager? Look for a bank that makes efforts to address your needs in a timely manner. Also, check out the bank’s web site and phone services to see whether they are convenient and easy to use.

5. Accessible ATMs

You want access to your money from most places. Think about where you are likely to need an ATM, and try to find a financial institution that provides that access. This doesn’t mean that you have to bank with a national chain to get wide access to your money, though. Many community banks and credit unions are part of co-ops that use a network to allow you access your money, fee-free, from ATMs in that network. See what sort of network you can tap into for ATM use.

6. Online Banking

Having access to your account information whenever you want it, along with the ability to manage your transactions and schedule transfers, is a huge advantage. Find out if your bank offers online banking, and whether a fee is charged. Most banks these days understand the desire for online banking, and provide it free of charge. You can also find out whether your bank offers mobile banking, so that you can use your phone to access your account. If convenience is important to you, online and mobile banking are definite requirements.

7. High Yield Options

You want more for your money, so looking for a bank that offers high yield accounts is a good idea. Look at the options offered by savings accounts, and find out whether there are special savings accounts with better yields. You can also ask after interest bearing checking accounts, and consider CDs. In some cases, local banks are offering very competitive rates, so it might be worth it to look close to home as you consider your banking options. In some cases, it might be worth it to consider online banks for some accounts, since you can get higher yields.

8. Low Rate Loan Options

While you don’t have to get a loan at your primary banking institution, it can still be comforting to know that your bank offers competitive loan rates. Find out about programs related to mortgages and auto loans. Also, do research on the personal loans offered by prospective banks. This can help you determine whether or not the bank provides special programs and lower rates for its customers.

9. Linked Accounts

You can add a considerable amount to the convenience of your banking when you have linked accounts. Find out whether it is possible to link your savings account to your checking account. In some cases this can help you in an overdraft situation. You may have to pay a transfer fee of between $5 and $15, but that is usually better than paying an overdraft fee of between $25 and $40. Linked accounts can also make it easier to make credit card payments and set up automatic transfers so that you can easily move money from your checking account to your savings account.

10. Additional Products and Services

Finally, look for a bank that offers the products and services that you want. Think about additional needs you might have, such as business banking or retirement account planning. Research the offerings, and decide whether the bank will suit your needs. You can simplify your finances by having more accounts at the same place. Of course, this doesn’t mean that you settle for an inferior financial product just because it is at your primary financial institution. Shop around for individual accounts and services to get the best outcome.


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Comments
25 comments.
Comment #1 by KenBDG posted on
KenBDG
I want to thank Miranda for writing this article. Note, we no longer separate blog posts and articles like we did in the past. We made this change in an effort to consolidate content so it's easier to find.

Below are related blog posts that provide more details on some of the above topics:

5 Important Things to Know about Deposit Insurance for Banks and Credit Unions
9 CD and Savings Account Details That Your Bank Won't Tell You
Features That Make Your Local Credit Unions More Convenient
Issue of Restrictive ACH Policies
Inside Look at ACH Transfer Speeds at Online Banks

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Comment #2 by across the pond (anonymous) posted on
across the pond
excellent job miranda now you can take a vacation ken

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Comment #3 by rosie43 posted on
rosie43
A very good article. I would be reluctant to use a bank or credit union as a retirement vehicle unless you are into CD's.  Most work on commissions. Nothing really wrong with that if you want to pay big commissions and loads but I would read a little about funds and stocks and bonds and go to maybe a financial advisor that charges an hourly fee. Employees at banks are transferred from branch to branch or leave for another bank and most of the time you cannot get a real relationship with anyone. Without a fudiciary responsibility they really care about the commission in many cases. Many will try to sell you a variable annuity.

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Comment #4 by Anonymous posted on
Anonymous
you negative voters are a piece of work does not ken deserve some time off and why are you bashing mirandas article

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Comment #6 by Anonymous posted on
Anonymous
Good post.  I get very frustrated to hear people talking about banks charging for things, as though they do not have the ability to shop around.  I have a bank giving me 4.5% on a checking account for balances up to $25K, but it charges $20 for checks.  My other bank pays 3% on the checking account, but charges $5 for checks.  So I only get checks from the one charging $5.  And that $5 is the only thing I've ever paid to either one of these banks.  Shopping around is key.  I would add a caveat to #7 on this post.  Don't take a bank's word for it that the account is "high yield."  For example, Wachovia offers a "high performance money market account" with 0.02% interest.  My checking account rate is 225 times greater than that "high performance" account.

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Comment #7 by Anonymous posted on
Anonymous
Not sure Rosie43 gets the concept of the small bank. Bank employees don't get transferred around much when a community bank only has six or eight branches, all within a few hours of each other. I still have an account in a town where I haven't lived in over a decade, and, when I call, I get the same woman who was there when I opened the account 20 some years ago. (I still picture her as she looked in 1999 and I hope she thinks I still look the same, too!)

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Comment #8 by Anonymous posted on
Anonymous
I live in a small town of 4500 and have 4 other small towns within 8 miles and 2 bigger towns one 100,000 and one 800,000 about 30-40 minutes away. In my town of 4500 we have 5 banks with a total of 7 offices plus 2 credit unions. The financial people come and go every few months. They all try to sell annuities. They are paid by commissions. You never have a chance to form a relationship with anyone. Usually they have someone else come in if you want to buy an individual stocks or bonds. Otherwise the branches sell annuities and mutual funds or CD's. Always loaded funds though, even in the credit unions.  I live in the midwest and that is the way things are for the 50 years I have banked in this area. Glad that the small banks in your area keep their employees. Too many headhunters around here.

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Comment #9 by TFB (anonymous) posted on
TFB
No you are not doing banks favors when you deposit money with them. Banks make money from taking risks and tying up their money in loans. If you want to earn the high interest rate banks earn, you can do the same thing banks do -- taking risks and tying up your money -- by buying bonds. Just don't cry when your borrowers don't pay you back. They don't give you ATM or bill payment service either.

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Comment #10 by last rose of summer (anonymous) posted on
last rose of summer
right on tfb have been telling people this for years  cds are  a waste of time and money and make no dollars and sence

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Comment #11 by careful with bank of america (anonymous) posted on
careful with bank of america
I had my home financed with Bank of America. I sent extra payments to be applied to principle (trying to pay off home early) No matter how I labeled payment slip, wrote on checks, and made several phone calls. It was posted incorrectly over and over. It took a lot of my time to get corrections each month. Corrections were then posted to account sometimes with a 2 week delay. I have sent complaints, but have had no resolutions. I spoke with Tiffany Stephenson Operations Consultant Office of the CEO and President Executive Customer Relations. I sent information she ask for, but instead of getting a resolution. My emails are now returned as undeliverable and phone calls are not returned. So just becareful and watch your account closely if you choose to use this bank. I learned the hard way. They are not interested in customer only the dollars.‎

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Comment #12 by Anonymous posted on
Anonymous
plain and simple bofa  is the worse

3