There comes a time in every person’s life when their earnings outgrow their piggy bank. It is at this point that they might decide it’s time to open a savings or checking account. With seemingly endless options from which to choose, this can be a daunting task for any first-timer. Moreover, most banks overwhelm potential customers with deals and jargon they do not understand. To simplify the process, we have come up with five things you should think about before opening an account.
One of the many ways banks make money is by charging their customers service fees. Whether they come in the form of ATM fees or monthly maintenance costs, these charges have a way of adding up over time. When interest rates were high, costs were rarely a concern because accrued interest would cover them. But with rates near historic lows, many customers lose money on their checking and/or savings accounts because of sundry service fees. As a potential client, it is important to look for financial institutions that do not charge excessive fees for the services you use on a regular basis.
If you are someone who either prefers to or needs to handle transactions in person, the physical location of the institution takes precedence. For obvious reasons, large establishments that have numerous branches may serve you better. It is also important to consider the number of ATMs the institution has, since most banks charge fees when you use a cash machine that is not a part of their network. Also keep in mind that convenience is something you almost always end up paying for. As such, many of the larger, more accessible providers charge more and larger service fees and have less competitive interest rates.
Some financial institutions penalize customers for letting their account balances dip below a certain level. So, if you are someone who lives paycheck to paycheck, it is best to avoid these establishments like the plague. The amount of money they will cost you in punitive fees could erase your hard-earned savings in no time.
Because they have more resources, the bigger banks typically offer more services. But once again, you often end up paying for those services in fees, even if you don’t need them. That is why it is always a good idea to shop around for a financial institution that gives you the tools you need to manage your money your way.
It might not occur to you when you are just starting out, but somewhere down the road, you may want to buy a home and start a family. To deal with those adult responsibilities, you will almost certainly need a loan and/or a home mortgage. Applying for either can be a grueling process, but it helps to have a good relationship with your banker.