What was the first financial decision you ever made?It likely took place before your first job, before you started getting a weekly allowance, or even as far back to when your annual income consisted of Tooth Fairy money and lucky pennies. The first financial decision you ever made was probably where to keep your money. Show
When you first made that decision, piggy banks, sock drawers and treasure boxes all seemed like justifiable options. As it turns out, they aren’t nearly as secret or secure as you might have hoped. Putting your money in an insured account is the best the solution, but in order to do that, you first need to choose a financial institution. Whether you’re new to banking or feel the need to make a change, there are a lot of factors to consider when deciding which financial institution to go with. So what should one look for? Choosing the right one starts with knowing your bank usage and individual preferences. Here are six factors to consider when choosing a financial institution: SecurityThe whole point of putting your money in the bank is to keep it safe, right? If you’re worried about what could happen to your assets if the bank were to go belly-up, you need to choose an institution that is protected by the government. Generally you want to make sure the bank or credit union you choose is insured by the Federal Deposit Insurance Corporation (FDIC) for banks, or the National Credit Union Association (NCUA), for credit unions. Do not use a financial institution that does not have these protections; you want to make sure your money is secure. ConvenienceKnowing your money is safe in your account doesn’t count for much if you have trouble accessing it. Making sure your financial institution offers convenient options is important, because let’s be real, time is money. So whether it be accessing your account through online banking, a mobile banking app, or banking at a physical location, you want to make sure that whichever way you prefer to do your banking, it’s convenient for you. RatesInterest rates work both ways: the rates you receive on money deposited should be as high as possible while keeping the liquidity you need, and rates you pay when borrowing via a credit card or loan should be as low as possible without having compromised service and options. Credit unions, as not-for-profit, member-owned institutions, may have higher APYs on deposit accounts and lower fees and loan rates than traditional banks. FeesBefore you open any account, you should ask to see a complete fee schedule. Depending on the institution, the types of fees you can expect may include: an account opening fee, check writing fee, monthly maintenance fees, minimum balance fees, online or mobile banking fees, bill payment fees, transfer fees, overdraft fees, etc. Fees can add up quickly, so make sure you are aware of any costs associated with an account. TechnologyAccording to Pew Research, nearly nine-in-ten Americans today are online, and 77% own a smartphone. With the increasing number of connected users, online banking features can be crucial. Your financial institution should provide innovative technology, including the latest options, such as mobile apps, online business account access and mobile banking services. Good technology can help you stay on track with your money. Determine the must-have technology features you would use. This can help narrow down the list of suitable institutions. Customer ServiceWhen you have a problem or question, the last thing you want is to sit on hold or get a customer service representative who is unhelpful or rude. Ask around to find out which banks or credit unions make your friends and family happy. At the end of the day, choosing a financial institution is a personal decision that has a big influence on how you manage your money and time. If you make the effort to ask questions and compare services, you’ll find the best home for your finances. The information provided is general in nature and may not apply to your specific situation. MCCU does not provide tax or legal advice. Please consult with your personal financial advisor. « Return to "Blog" Go to main navigation
Grant Crowder and Getty Images We want to help you make more informed decisions. Some links on this page — clearly marked — may take you to a partner website and may result in us earning a referral commission. For more information, see How We Make Money. Different bank accounts often serve different purposes, and the right mix of accounts in your portfolio is a great way to ensure your money is working best for you. There are plenty of details that can help you decide which bank and which accounts offered by that bank are best for you — but it’s important to start by determining your current situation and financial goals. How much money are you starting with, and what are you setting it aside for? How long do you want to keep it in the account? Will you make regular contributions? Once you’ve set a goal and a plan for your money, you’ll be more prepared to find a bank that offers exactly what you’re looking for. Here are a few things to consider, and expert advice to help you evaluate a bank before opening up an account. What to Consider When Choosing a BankThese factors can help ensure you choose the financial institution and bank account to reach your financial goals. Here’s what to look for:
FDIC or NCUA InsuranceAny bank or credit union you choose should be federally insured by the Federal Deposit Insurance Corporation or National Credit Union Administration. This is the baseline criterion: You need to know that if your bank were to shutter, your money (at least up to $250,000 of it) will be safe and accessible. Otherwise, you could be risking your financial health on an institution that won’t have your back in a worst-case scenario. Bank ReputationWhen weighing the merits of different banks, reputation matters. Tracy East, outreach and communications director for Consumer Education Services Inc., suggests checking the Better Business Bureau and your state’s banking commission for complaints or pending lawsuits. “Do your due diligence if they’re a newer bank that doesn’t have an established reputation and name that you can trust. Find out what people who have used them are saying and if there have been any issues or problems.” Pay attention to how a bank responds to negative reviews too, says Todd Christensen, an AFCPE-accredited financial counselor who works for Money Fit by DRS Inc. If the bank tries to resolve the issue positively, that’s a great indicator they’ll treat you well, but “avoid any bank that blames the client.” Online vs. Traditional BankingThose who aren’t tech savvy may be wary of banking online, but rates on online savings accounts are much more competitive than those of traditional, national banks. Online, you can find savings account APYs between 1% and 2%, versus the typical 0.1% (or less) you’ll see at major brick-and-mortar banks. The trade-off, of course, is you can’t go to an online bank in person for any issues. You’ll have to take advantage of whatever phone or digital customer service is offered, which may be a drawback depending on your personal preference. Mobile and Online BankingEven if you go with a bank that isn’t digitally native, you’ll still want one with online account access and even a mobile app. Depositing checks and initiating online transfers can save you a lot of time. Brent Weiss, chief evangelist of Facet Wealth, a financial planning firm in Baltimore, says that “while the digital footprint is not critical, it does show a willingness to invest in technology.” Branch Locations and ATM AccessIf you value the in-person banking experience, then make sure to go with a bank with locations and ATMs near you — say, between your home and workplace. Otherwise, you may be taking a significant chunk out of your day to get your quarters rolled or a check deposited. And if you choose an online bank but still want the option for in-person transfers, check what options are available for ATM access. Some banks may allow access to certain ATM brands, while others may reimburse ATM fees. Account Types OfferedChecking and savings accounts are the bread-and-butter products of any bank, followed by money market accounts, certificates of deposit, and loans. While you can open several one-off accounts that take advantage of the best rates of every product category, it wouldn’t be very efficient. “Keeping all of your accounts under one roof like savings, checking, and high-yield money market accounts can help simplify your financial landscape,” Weiss says. “I generally recommend having only one or two banking relationships unless there is a specific reason to branch out.” Interest RatesOnline banks still tend to have the highest rates for savings accounts, money market accounts, and CDs. In today’s rising rate environment, it can really pay to choose a bank with competitive rates, which adjusts its APYs to keep up with other options on the market. A high rate can offer you a small, but not insignificant, form of passive income as you store your money for an emergency fund or short-term savings goal. FeesFees are also important to monitor. Many accounts have overdraft fees, monthly management fees, and minimum balance requirements that can trigger penalties if you fall below them. Sometimes banks will waive those fees or minimums if you meet a certain standard, like adding direct deposit to the account, but you’ll need to make sure you meet them. Otherwise, you’ll be paying for the privilege of just having an account. Online banks are also more likely to have lower fees or none at all than traditional banks. East suggests finding out all fees beforehand and getting them in writing. “I’ve heard too many people [say] they didn’t know that they had a fee if they dropped below a certain balance, and that fee made them overdraw their account and then there’s that ripple effect.” Weiss agrees with the strategy. “While monthly fees seem small, they can eat into your hard-earned savings over time.” What are the important things to consider when choosing a bank or credit union?8 steps to choose a new bank. Identify the right account. ... . Look for banks that charge low or no fees. ... . Consider the convenience of a bank branch. ... . Take a look at credit unions. ... . Find a bank that supports your lifestyle. ... . Examine digital features. ... . Understand the terms and conditions. ... . Read reviews for banks you're considering.. What are the important things to consider when choosing a bank or credit union quizlet? Convenience.. Fees.. Interest rates.. Deposit insurance.. What factors should you consider when choosing to open a bank account?Before you open a checking account, consider these factors:. Insurance.. Minimum deposit requirements.. ATM network.. Interest and rewards.. Mobile app features.. |
What is the most important factor to consider when choosing a bank or credit union?
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