Simple Advice for Picking a Bank
A few decades ago bank choice wasn’t something that would require incredible research and thought. Many people might simply use the same bank as their parents, and would start with a savings account as a child and then move up to a checking account some years later. Today’s banking environment is much different, however, and choosing a bank today may come with great perks or it might result in hefty fees.
Look at the Fees and Compare
In almost all cases, the amount of fees charged by a bank will always outweigh the value of the features offered by a bank. Just like airlines get the majority of their income today from fees (like exorbitant baggage fees), banks today don’t make money unless they charge lots of fees. If you’re not paying attention, those fees could represent a significant drain on a modest checking account.
Shopping around for the best bank to conduct banking activities should always begin with a comparison of the fees charged by each prospective bank. Those fees will then be weighed against the convenience factor of the bank’s other features (such as brick and mortar locations). Although it might seem incredible, there are banks that don’t charge fees for absolutely everything, but finding them does take a little comparison shopping.
For example, Capital One is a bank with almost zero fees associated with its checking and savings accounts (Capital One recently bought ING Direct). Depositing money and transferring money are free activities, and there are no monthly fees associated with a savings or checking account. The only fees a typical user will run into will be for ordering checks (which many people don’t use at all).
Conversely, financial institutions that have physical branches all over the country, like Bank of America and Wells Fargo, will usually have a few more fees associated with their services. Those fees might include a monthly fee associated with the existence of a checking account, or fees that are incurred during money transfers such as the wiring of funds to another account. In most cases, internal transfers from a savings to a checking account don’t incur fees.
Decide Online or Local
Capital One’s banking structure is entirely online, and so the only way to deposit funds is to take a picture of a check through the bank’s mobile banking application. Local credit unions and regional institutions, on the other hand, offer the opportunity to walk up to a teller and deposit a check after which funds may often be withdrawn the same day (up to a set dollar amount).
Internet banking today is rising in popularity because of the portability of such accounts, and brick and mortar institutions like Citibank and Chase have been running heavy advertising campaigns that boast the convenience of using their online services. In addition, all major financial institutions have a mobile app these days which may accomplish a number of services like checking deposits and transfers. Some financial experts even suggest that the time might come when it may be possible to apply for Wells Fargo loans or Bank of America mortgages straight through a mobile interface. These large banks already have mobile apps with in-depth tracking and information features, such as mortgage calculators and spending analyzers. These services go hand-in-hand with the online banking features that allow people to pay fees without having to write checks or enter in a debit card number.
Considering a Suite of Options
Some of the advantages of particular institutions are the number of services beyond simple banking offered to customers. For example, with TD banking or any bank with heavy ties to an investment group, there are opportunities to invest in the stock market as well as standard retirement planning like annuities. Not every person in need of a bank account requires such additional features, however, and would not need to pay extra for the privilege of having access to something like estate and trust planning.
When choosing a bank, the two central elements for discussion will very likely always include the overall cost of banking at a particular institution and whether that bank meets all of the needs of its clients. Although many families require a whole host of services, such as mortgages, loans, and traditional checking accounts, there are also people in need of a very simple, low-cost bank account without all the frills.
Because the overall cost of a modern bank account might vary so much, paying attention to the small details like price and fees should always result in the best experience. In addition to scanning all of the fees and options provided by a financial institution, contacting each bank directly with remaining questions is also a healthy investment of time. Bank choice should only occur after a person has gained a clear understanding of whether that institution will meet each and every financial need.