Deciding on a financial institution can be a difficult task because there are so many different kinds—credit unions, local, national, or online banks—and each one has different factors that you need to take into consideration. After doing thorough research, you must carefully assess your needs and financial circumstances, and then make your final choice based on those factors. Here are some of the different factors and options you will need to examine when deciding on the right bank for you:
Opening a Bank Account
On the day you open your bank account, you must bring certain essential items with you. The first (and seemingly apparent) thing you should bring with you is money to deposit into the account. Before starting the process of opening an account, you should know the bank's minimum deposit amount, and have it available. The second thing you'll need to bring is several forms of identification documents, such as state-issued identification cards and your Social Security card, to prove your identity.
(Click here to learn more about smart banking and account management.)
Factors to Consider
Choose a bank that is under Federal Deposit Insurance Corporation (FDIC) protection. This gives you peace of mind, knowing that your money is safe if the bank falls. Indeed, bank failures have happened in the past, and people have lost a lot of money as a result.
Financial Stability of an Institution
Think about the overall financial health of your prospective bank. Research it online. Put the name of the financial institution you're considering into any search engine, entering the words "financial health." If you read that the bank is struggling for any reason, avoid it. If that bank does actually fail, you'll still be able to get your money, but do not expect to receive your compensation right away; you'll first need to fill out copius amounts of paperwork and claims forms, and likely wait for weeks or even months following the institution's closure for the insurance companies to process your request.
Every bank charges fees. However, you should ask yourself whether the fees of a given bank are reasonable. Some bank fees hurt your wallet more than others. Schedule a meeting with the representative of your chosen bank. During the meeting, ask him for details on what his bank's fees are, and what kind they are—for instance, some banks charge ATM usage fees which you want to find out before signing up for an account.
Select a bank with low monthly minimum savings (or checking) deposit requirements. While a minimum is typical for money market accounts, it is unacceptable for a regular checking account.
It's important for you to consider the quality of a bank's customer service. Observe the tellers to see whether they are friendly professionals who process customer lines quickly. How they treat others is an indication of how they will deal with you. You can also look for feedback from other bank customers online.
(Click here to learn more about different types of bank savings accounts.)
Weigh Your Options Before Deciding
Online vs. Traditional
Another decision to make is whether you want a bank in the brick and mortar or the Internet world. Both types of banks have their advantages. For example, physical banks are able to offer personal, first-name basis service. On the other hand, if you want a bank where customer service is available 24 hours a day, think about an online institution. Help is always available through telephone, email, or chat services.
Local vs. National
If you are not much of a traveler, a local bank could be the right decision for you. If you tend to move or travel a lot, you might choose a national bank, because you have access to many more branches and ATMs than you would with a local bank.
Bank vs. Credit Union
The main difference between a bank and a credit union is that a bank is owned by stockholders, and the management must answer to them. A credit union, on the other hand, is owned by its members.
Other Questions to Ask
Before signing an agreement for any financial institution, ask to see the fine print. Read it, and ask the representative to sit down and explain any details that you don't understand. In addition, check with the Better Business Bureau to see how many customers have lodged complaints against your prospective institution.
Want to contribute by becoming an iGrad author yourself? Let us know!