How to Choose a Bank - Three things to consider
Whether you want to open a savings account or you’re shopping for personal loans, the banking services you choose should be adjusted to your individual needs. With so many traditional and online financial institutions on the market, consumers can get a bit confused when picking the right bank.
This process can be even more complicated for those who open a bank account for the first time. Luckily, we are here to help you with the decision-making process.
So, how to choose a bank properly? Our article introduces the most important criteria that each consumer should follow before choosing their next bank, so let’s get right into it, shall we?
What bank is the best?
The best bank is one that fits your financial needs. That said, a good bank is a bank that can respond to your shifting financial situation and support your financial habits while satisfying your future financial plans.
For example, if you’ve just started your own business, you should choose a bank that supports business growth. When opening a bank account, some consumers focus on savings only. Whether it is for a dream house or a child’s college fund, many banks offer high-yield accounts for consumers with stable financial history.
How to choose the right bank
Whether you are opening a bank account for the first time or looking for a new bank, our guide will help you make a smart choice. There are three things to consider - bank type, financial products offered, and fees. Additionally, other miscellaneous benefits can help you make a final decision if several banks provide similar deals.
If you are wondering how to compare banks, you first need to know that there are different types of financial institutions providing banking services. Our article will describe the differences between online banks vs traditional banks and compare them against credit unions.
If you prefer face-to-face business, traditional banks are the best option for you. Traditional banks are the oldest type of bank, obviously, offering financial services through a network of brick-and-mortar shops. Choosing a bank of this type comes with lots of benefits.
Usually, traditional banks offer a wide range of financial products, from checking accounts and loans for personal needs to various financial products for small businesses. An extensive network of ATMs and in-person support at local branches are also good reasons why many consumers choose traditional banks over online banking and credit unions.
However, traditional banks usually come with more expenses than online banks, so you should think about what you actually need before opting for this type of solution.
Unlike traditional banks, online banks offer services and products through websites and phone support. Some of them have brick-and-mortar offices, but most of the consumers do banking online. So, to answer the question “ what bank should I choose?” you first need to decide how you prefer to do banking - online or in person.
For generations used to doing everything online, branchless banks are a better fit, as everything can be done from the comfort of your home or via a mobile app. Lower fees and competitive rates also work in favor of online banks.
Credit unions are member-owned financial organizations that provide financial services and products to their members. Unlike traditional banks that must reach revenue goals, they are nonprofit organizations, which means that the profit is returned to the members through lower fees and high-interest rates.
When deliberating on how to pick a bank you should also consider the connection between the credit unions and the local communities. If you want to give something back to your community, you should choose a credit union.
Financial products offered
Banks offer a wide range of financial products and services for both individuals and businesses. Before you choose a provider, think about what type of account you need. There are various bank accounts to choose from, including checking accounts, savings accounts, high-yield savings accounts, certificates of deposits, etc.
What bank to choose depends on what kind of service you need. If you need more than a bank account, consider a bank that offers other types of banking services such as loans, mortgages, credit cards, etc. Some banks have specialized in providing services in the area of budgeting and managing personal finances, offering products that can help you achieve your financial goals faster.
Consider a bank with affordable fees and Interest rates
In our opinion, banks that offer zero or low fees on checking accounts and other types of products should be your priority. Since online banks usually have few or no physical offices at all, they have lower costs than traditional banks. Hence, the fees you pay will be lower due to reduced operational costs compared to traditional banks.
But finding a bank with no fees or low ones isn’t always easy, as there are often hidden costs or other downsides to consider. Before opening an account at a bank, check what kind of costs you will need to pay and check the prices. Consider the following typical costs, at least some of which almost every bank will charge you for:
- Monthly maintenance fees
- ATM fees
- Overdraft fees
- Foreign transaction fees
- Account fees
Aside from fees, you should also check interest rates. This is especially important if you want to open a savings account. Check interest rates for this account type at different banks and credit unions so that you can choose the most beneficial one.
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What else to look for when choosing a bank
After you decide which type of financial institution is right for you and choose the type of account that you need, check other features that you can take advantage of. Each bank offers different kinds of discounts; some boast free financial tools, mobile apps, and other useful features.
If you make withdrawals frequently, a good bank to bank with is the one that has an extensive network of ATMs. Almost all good online banks don’t charge fees on in-house ATM withdrawals, but not all of them have a large number of ATMs available. Picking a bank with ATM machines in different locations will help you travel a lot and need to withdraw your funds often.
Local bank offices might also be important to you, even if you decide to do business with an online provider. So, when searching for bank accounts, especially checking accounts, consider banks that have offices close to your location.
Online and mobile services
Modern online banks enable users to streamline the application process for all types of products, from checking accounts to car loans and mortgages. In addition, they offer mobile and desktop apps that allow access to your account at any time you need it. For many consumers, the question “How to find a good bank?” has a simple answer - find the one that offers state-of-the-art online and mobile services.
Choosing a new bank can be a daunting task because there are so many different financial institutions, including traditional banks, credit unions, and digital banks. To choose the right bank to save your money, you first need to consider your financial needs and think about future financial plans.
In our opinion, you should consider three important things before choosing the right bank:
- Type of financial institution (credit union, traditional bank, online bank).
- Type of a financial product you need.
- Rates and fees.
Choosing a bank account is an important part of your financial life, so make sure you make a smart decision. Bank accounts that come with no or low monthly fees are the easiest ones to open. Also, you can search for bank accounts at online banks because the application procedure is usually fast and very straightforward.
It is essential to select a financial institution that will take care of your money properly. It’s one of the most important financial decisions you can make, really. Before you get to comparing banks, we suggest you to read our guide on choosing the right bank to see what are the most important things to consider.
For years, the clients I worked for were banks. That gave me an insider’s view of how banks and other institutions create financial products and services. Then I entered the world of journalism. Fortunly is the result of our fantastic team’s hard work. I use the knowledge I acquired as a bank copywriter to create valuable content that will help you make the best possible financial decisions.
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