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.