How to Evaluate Banks Before Opening an AccountPosted at by ifydcat on category Personal Finance
It’s important to open a bank account as part of your personal finance plan. You need a safe place to house your money; in addition, having checking and savings accounts is good for your credit. All banks are not created alike, however, and you should do some comparison shopping before deciding where to open your bank account.
Look carefully at the terms of free checking and savings accounts. Some banks charge a monthly fee for your accounts if you go below a certain balance, while others do not. Compare the account terms from at least three different banks before you decide where to open your account. Then check your budget carefully to determine whether you can afford to keep the minimum balance in your account that each bank requires. If a bank requires a minimum balance of $1,000, for example, ask yourself if it’s reasonable to expect to have that kind of balance in the account at all times. If you go under, a $5 fee might not seem so unreasonable, but if you have to pay it every month, it adds up.
You should also find out some information about ATMs. ATMs are more convenient than using the bank, and many bank customers use them exclusively so that they can get cash when the bank is closed or deposit checks without going inside the bank. However, if a bank you’re considering only has a few ATMs in your general area, you may not find it very convenient to use them. In addition, some banks charge high fees if you use an ATM not associated with their bank. Make sure you know what these fees are upfront so that you can make an informed decision about whether this bank is right for you.
You should also find out the bank’s policy towards debit card use. It can be even more convenient to use a debit card than to use an ATM, and sometimes you can get cash back at the cash register when you use a debit card. However, some banks charge fees if you use debit or if you use your card for a purchase of less than a certain amount, and these hidden fees can take a large chunk out of your account balance. Think twice about signing up with a bank that charges fees for debit card use, especially if you use debit a lot.
If you can, sign up with a bank that has a rewards program. Some banks offer cash back for using your debit card; this puts a few extra dollars into your account around the beginning of each month. A rewards program doesn’t make up for fees for using debit or other fees your bank may charge, but if you can get a rewards card from a bank that doesn’t charge many fees, you may be able to improve your financial position just by using your card.
As you can see, there’s a lot more to choosing a bank than you might have thought. You need to get as much information as possible before opening a bank account so that you can open the account that is right for your financial situation.