Factors to Consider When Choosing A Bank - Finance Blvd (2024)
Bank StoriesBy Ami Ciccone
Everyone needs to choose a bank or a credit union to park their money at some point in their lives. Whether you are trying to open an account in a bank for the first time or are just looking to make a change there will be several factors which you will need to consider. You cannot expect to find a bank account which is suitable for every individual in banks or credit unions.
Initially, you need to understand the kind of usage you have along with any preferences before you decide on any bank as being suitable for your requirements. Making any mistakes at this stage will expose you to unnecessary fees and expenses which you would rather avoid. What are the factors to consider when choosing a bank?
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These are the top factors which you must consider before you choose to deal with any bank.
You should positively consider overlooking any bank that is unable to give you adequate protection for your funds. When choosing a bank should also make an attempt to understand whether it is insured by the Federal Deposit Insurance Corporation [For Banks] Or The National Credit Union Association [For Credit Unions]. Dealing with any other banks is an absolute no.
Fees
You should be trying to find an account that will not impose upon you any fees for basic account transactions. The bank chosen must not be charging you money for talking to a representative or using in-branch services while also giving you the option of avoiding monthly fees, fees for account assistance and per check fees.
ATM Fees
If you intend to use your ATM card frequently you should be considering whether your bank does or does not charge you money for ATM usage. Quite a few banks offer to reduce ATM fees for certain amounts every month. If you are a frequent traveler and will not be in a position to use the ATM of your bank this matter will be extremely important for you.
Banking transactions are presently conducted by direct deposit but this did not mean that people do not need to deposit the occasional check or cash. Banks that do not have a location close to you mail for you mobile services to make the deposits convenient. Consider whether you would want to use such services and if minimum balance requirements how the bank chosen by you can accommodate your needs. You will not need to consider this factor if you cannot imagine a situation where you need to deposit cash or checks.
Interest Rates
What are the interest rates charged or given by the bank? You should be getting information about the interest rates paid on the money you deposit with the bank and the money you borrow from the bank. You can consider a bank which is offering a higher than average interest on your deposits and charging a lower than average interest on your borrowings because it would be ideal for your situation.
Online Banking Features
Online banking features are an essential requirement in the present day world. You may need to pay bills or transfer cash to others frequently. Ensure that the bank is capable of processing the transactions easily and without delays.
Minimum Balance Requirements
Some banks require you to maintain a monthly minimum balance in your account before they begin charging fees for any shortfall. You must ensure that the minimum balance requirement is a figure that you can afford comfortably.
Customer Service
You must inquire whether the bank chosen by you has a customer service department that can help you if you come across a problem or have a question. Who wouldn’t want to sit on hold for a long time with a telephone trying to contact the customer service representative who is not being very helpful? Make inquiries around with your friends or colleagues to understand which of the local banks are giving them maximum satisfaction.
Do not walk into a bank the impression that they will be able to satisfy every requirement you have. It is highly possible for some of the banks not to be able to meet your needs and therefore the onus of making proper inquiries and trying to understand the factors which should be considered when choosing the bank entirely depends upon you.
In conclusion, there are many factors to consider when choosing a bank. Be sure to compare interest rates, fees, customer service, convenience, security, account options, online and mobile banking, financial health, additional services, and reputation to find the bank that is the best fit for your needs.
Fees. Like most financial products, checking accounts charge various fees to access your money. Some common fees include: monthly service/maintenance fee, overdraft fee, non-sufficient (NSF) fee and ATM fee. These fees can range from a couple dollars to $35 per occurrence, making repeat fees costly.
Personal circ*mstances that influence financial thinking include family structure, health, career choice, and age. Family structure and health affect income needs and risk tolerance. Career choice affects income and wealth or asset accumulation.
The major risks faced by banks include credit, operational, market, and liquidity risks. Prudent risk management can help banks improve profits as they sustain fewer losses on loans and investments.
They earn interest on the securities they hold. They earn fees for customer services, such as checking accounts, financial counseling, loan servicing and the sales of other financial products (e.g., insurance and mutual funds).
When you apply for a business loan, consider the 5 Cs that lenders look for: Capacity, Capital, Collateral, Conditions and Character. The most important is capacity, which is your ability to repay the loan.
A lender's primary concern is whether your daily operations will generate enough cash to repay the loan. Cash flow shows how your major cash expenditures relate to your major cash sources.
The three most important factors when choosing a bank for checking and savings accounts are the type of bank, the rates and fees it charges, and the extra features it offers.
One of the most important aspects of choosing a depository instuon is to ensure that it is insured. There are two main types of insurances: FDIC for commercial banks and NCUA for credit unions. Both of these insurances are funded by the government and cover a single account up to $250,000.00.
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You should be trying to find an account that will not impose upon you any fees for basic account transactions. The bank chosen must not be charging you money for talking to a representative or using in-branch services while also giving you the option of avoiding monthly fees, fees for account assistance and per check fees.