Choosing a bank is one of the most important financial decisions that a person can make. While it is not quite as important as a person’s salary or savings habits, finding an excellent bank can help make one’s financial journey much easier. Of course, the requirements for one customer are almost always different than those of another. That said, the best way to start choosing a new bank is to run through a few basic questions so as to know exactly what it is that an ideal bank should be able to offer.
Different customers use banks for different purposes. Someone may only need a bank as a place to have a checking account, preferring to keep their savings in less liquid forms like the stock market. Others may look for a bank that is able to offer especially good rates on loans, with less of a mind to what the bank offers savings customers. Knowing what it is that a bank will be asked to do is one of the first steps in figuring out of a bank is an ideal fit. After all, no one wants to be in the position where her high rate on an auto loan is subsidizing someone else’s savings account.
Online or Downtown?
Next it is important to ask what type of bank a person is most comfortable with. Many banks today are shifting to an increasingly online presence, with many not having a physical branch at all. Proponents of this point to the fact that due to reduced costs, these banks can often offer their clients significant savings. However, that comes at the cost of being able to simply walk into a branch; everything must be done online or over the phone. Figuring out just how much customer service is required to keep someone comfortable is crucial to figuring out if a bank will be a good fit.
Smaller or Larger?
Likewise, different sized banks are often able to offer their clients different advantages. A smaller bank is more likely to be able to waive a fee or push through a loan more quickly, as the ultimate decision maker is more likely to be just across town rather than three states away. Likewise, many customers report that smaller banks have higher levels of customer service. However, those smaller banks may not be able to offer all the perks of larger banks, and due to their size, may be perceived as more vulnerable in the event of a run on banks.
Next, it is important to know what different banks offer in the way of ATM networks. Many large banks pride themselves of having thousands of ATMs scattered across the country. To combat this, many smaller banks have banded together to offer fee-free services on one another’s networks, or to refund fees. At any rate, knowing that there is an ATM nearby can help assure many clients that their bank is a great fit.
Earlier the risk of a run on the banks was mentioned, and it is worth remembering that every bank in the country is required to carry FDIC insurance, which (at this time) covers every depositor for an amount of up to $250,000. Notice that is each client and not each account. Because of this, some people may prefer to keep large amounts of money split up between banks.
Also of note for those considering a credit union is that credit unions are also required to carry insurance through NCUA, offering many of the same protections as FDIC.
What About Fees?
Finally, knowing about fees can definitely help determine whether or not a bank is a good fit. Some banks offer truly fee-free banking, only to charge more for checks or in the event of an overdraft.