Some people don’t give much thought to choosing a bank. They might choose a bank that’s closest to their home or work. And if they’re eligible for membership with a local credit union, they may go in this direction. However, choosing the right bank involves much more. Banks aren’t the same, and if you don’t ask key questions, you may select a financial institution that can’t meet your needs. Sure, you can always withdraw your money, close your account and go elsewhere if you’re unhappy with the service. But why go through the hassle? If you’re looking for a long-term relationship with a bank, it’s important to choose wisely.
Here are six questions to ask before selecting a bank.
1. Do you like to bank in-person?
If you don’t need to see a teller or deposit your check at a physical branch, an online bank might be a suitable match. An online bank may not work if you’re looking to open a checking account. But if you simply need a place to stash and grow your money, an online savings account offers much higher returns than traditional savings accounts. How much higher?
Open a savings account with a bank, such as Bank of America or SunTrust, and the interest rate on your savings account may hang around 0.01%. This is hardly the way to maximize your savings. But if you head online and deposit your cash in a high-yield savings account, you can earn upwards of 1.00%. Online banks don’t have a physical branch, and because of less overhead, they can offer higher rates.
Assess your banking needs and decide whether you can work with a bank that doesn’t have a physical branch. Many of these banks let you deposit checks into your savings with your smartphone, or you can transfer money from another bank account into your online savings.
2. How innovative is the bank?
Some banks can’t keep up with technology and fail to offer innovative banking features. Not a big deal if you’re not into technology. But if you have a smartphone and prefer mobile banking, you need a financial institution capable of meeting your demands.
Larger banks can usually offer online banking and mobile apps, but this isn’t always the case with community banks and some credit unions. Don’t get caught with a bank that’s stuck in the 90s. Ask about the bank’s use of modern technology. How advanced in the bank’s website? Can you pay your bills online? Transfer money? Apply for financing? Does the bank have a mobile app?
3. What are the fees?
Free banking has become less common, with many banks charging a monthly fee for checking accounts and savings accounts. Fee are non-negotiable. For this matter, you need to ask about fees before joining a bank. Comparison shopping doesn’t only apply to clothes, electronics and loans. Contact two or three banks and ask about fees. The less fees you pay for everyday transactions, the more cash in your pocket. Some banks charge a fee for counter deposits and withdrawals, transferring funds between accounts, and overdraft protection.
4. Is the bank convenient?
This is a question that you need to ask yourself. It’s good to have a bank with the latest technology features and the lowest fees, but if the bank isn’t located anywhere near your home or work, the perks may not be worth the drive.
Consider how often you visit the bank. If you make frequent weekly trips to deposit or withdraw cash, a bank closer to home or work is more convenient. This reduces your travel time and keeps your money easily accessible. Then again, if trips to the bank are few and far between, and you conduct the majority of your business online, the distance may not matter.
5. What products are offered?
At present, you may only need a checking or savings account. Think long-term when choosing a bank and decide whether the bank is capable of meeting future needs. Perhaps you’re thinking about applying for a vehicle loan in the future, or maybe an auto loan. Learn the bank’s other products, such as credit cards, certificates of deposits, IRAs and money market accounts. Having multiple accounts with a single financial institution has its perks, such as better interest rates and faster approvals. Don’t choose a bank based on one aspect. Consider the big picture and determine if you can see yourself having a long-term relationship with the institution.
6. Does the bank have a good reputation in the community?
A particular bank may have tons of positive reviews online. However, how does the community feel about the bank? You can learn a lot about a bank and its professionalism by speaking with relatives, coworkers, friends and neighbors. There is no such thing as a perfect bank, and the atmosphere can vary among branches. If you hear several complaints about a certain bank, and if a lot of people in your circles seem unhappy with the bank as a whole, take your money elsewhere.