How to Choose a Bank That’s Right For You
Choosing a right bank to trust with your finances is an incredibly important step in securing your goals. But a recent trend of banks merging and a whole new breed of financial institutions coming to be has made this task incredibly difficult.
When we say a trend of bank mergers, we mean – SNL Financial, a firm dedicated to financial research, has reported that in only 13 years (from 1990 to 2003) over 4,800 banking mergers have taken place. And the FDIC (Federal Deposit Insurance Corporation) is currently insuring 10,271 institutions. So, with this amount of institutions and mergers going around, how can you make the right choice?
Make a checklist based on this article, and you should be good to go. So, let’s get on with our bits of advice.
Choose a type of bank that you need
Remember, as a customer if you are a newbie in the banking world, you should choose the right type of bank to take care of you. Now, there are three main categories of banks: national, regional, and internet banks. And, while at the first glance it might seem like there isn’t much to differentiate them by, there definitely differ.
Big banks can offer availability across the country. This is incredibly important if you are a frequent traveler for business or for personal reasons – their ATMs can be found almost anywhere and they tend to function like a non-stop-shop offering every financial service you might think of or need. If you choose a big national bank as your bank, you will be capable of investing in mutual funds, buying insurance, getting a credit card, mortgage, student loan and many other things and still only work with that single bank.
While these banks lack the presence the big banks offer you if you do not plan on moving around a lot you could be rightfully attracted to their flexibility and the incentives they are willing to offer even for smaller account holders. They offer service at a more personal level and generally tend to have lower fees. And lastly, since they do not have to conform to the nation-wide decisions of the bank they can adapt their services to what their community needs.
Internet banks are a modern invention that offers the ease of use with lower interests. The fact that they are saving money by reducing their overheads due to the fact that they operate solely online means that, on average, to avoid fees your minimum balance only needs to be a bit over a thousand dollars (usually at 2,600 dollars for traditional banks). Another great thing about them is that they rarely, if ever, charge their customers for using ATMs that belong to other banks.
However, their services tend to be limited and the service is rarely personalized.
Trying to avoid fees?
A lot of banks have the advertisement that claims “free checking”. But that tends not to be really true as there is fine print that asks you to always maintain a minimum account balance so they do not charge you. Read the fine print and decide for yourself if that minimum is something you can maintain as it could be more beneficial than the hooks the banks which do not have this requirement put in. You see, those banks have to make money somehow too so some of them use overdraft fees to do so. That is not a problem, of course. However, some banks may process checks in a way that increases the chance of overdraft happening, so you should probably try to get information from that bank’s customers before joining the bank.
Using multiple banks?
We all like to have a bank that does it all, however, one-stop-shopping is not always the ideal way to do things. For example, if you are at a great bank whose services you enjoy, but their mortgage plans are not ideal, you should consider using a different bank to get better mortgage rates. Mortgages cost a lot of money and can really pose a big problem if you fail to make your payments, so it is imperative for you to get the best possible offer around.
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