Choosing the Right Bank Account for You
To the uninitiated, banking might seem rather complicated. Whether deciding which bank or account works best for you, which banking products are available, or which ones can actually make you money, we want to help you make the right decisions by ensuring you remain well informed.
When it comes to choosing the right account, deciding what your needs are should be your first task. Before we help you decide on an account, let’s review the differences between a checking and savings account.
Checking Accounts
Checking accounts are primarily used for everyday banking. Whether making a purchase, withdrawing from an ATM, or completing bill payments, a checking account is typically used to help manage transactions and other short term financial needs.
Saving Accounts
On the other hand, the aptly named savings account is typically used to help you save money you won’t need access to in the short term. Because of this, many banks offer attractive interest rates or annual percentage yield (APY to help you start building wealth. It should be noted that some savings accounts will also charge a fee once you have exceeded the allowable number of transactions inside of a month.
Making the choice
To get the most value from both of your accounts, there are some key elements of which you should be aware when comparison shopping. First off, you should seek out a bank that offers lower than the national average for monthly fees ($9.60). You should also seek a higher-than-average APY for your savings account (0.17%). Unless an account or bank has a perk you simply can’t live without, these national averages should serve as your starting point.
If your bank isn’t charging you a monthly fee, how do they actually make money? Simply put, they use your money, as well as the money from the bank’s other clients, and loan it out for mortgages, business ventures, and lines of credit,adding a healthy interest rate on to the loan repayments. This business model is the reason that a number of products offered by your bank allow you to make money as well.
Which Banking Products Can Earn You Money?
High-Interest Savings Accounts. We have already mentioned savings accounts with an APY. You can find banks and credit unions that offer an APY with an interest rate as high as 4.09% (Consumers Credit Union), though generally the high end of the interest offered is around 1%. These products often come with extensive terms and conditions y—most notably a minimum monthly balance.
Purchase bank stocks. Owning stocks in a bank is a good way to create long term wealth, as well as annual or semi-annual dividend payments. For the most part, bank stocks are a pretty solid long-term investment.
Signup bonuses. Another great way to earn money, or sometimes even products, is to find banks that offer signup bonuses for opening a checking or savings account with them. These products usually have extensive terms and conditions which must be met before collecting your cash or rewards.
How Do You Open A Bank Account Online?
Not only is it possible to open a bank account online, for some banks, it’s the only way. Fortunately for you, the process isn’t difficult. If you’ve set up an email address or other type of online account then it shouldn’t prove difficult. Once you have found the bank that’s right for you, visit their website and simply look for the section on setting up a new account.
What Is Required To Open A Bank Account?
Whether you’re getting your new account up in a branch or online, you’ll typically be required to provide identification in the form of a state-issued ID card or Driver’s Licence, military ID, birth certificate or passport. Generally, only a combination of at least two of these are needed and at least one of them must be accompanied by a photo. If you are setting up your account online, you will be required to email them clear photos of your ID. For greater peace of mind, most banks offer an app that lets you securely send them your ID. Once opened, the final step for some banks is to require a small minimum deposit.
Can I Have Multiple Accounts With Different Banks?
One great aspect of increased competition in the banking market is the vast amount of choices on offer. While comparison shopping you may very likely find that the right checking account is with one bank, while the right savings account is with another. While this is totally acceptable, it raises another question: how do you transfer funds from one account (or one bank) to another?
There are a variety of ways to do this. If you’re transferring funds within the same bank, but just moving them between accounts, you can accomplish this in branch, over the phone, on the website or using your bank’s smartphones app.If the transfer is between financial institutions, this can be accomplished in the branch that is sending the money, by way of a wire transfer (likely accompanied by a fee). Alternatively, you can directly withdraw the cash and deposit it into the other bank account. Or, if it is a smaller amount (a few thousand dollars), you can also use the bank’s website or app and perform an e-transfer to yourself. Typically an e-transfer is for sending someone else money—but can also be used for this purpose. E-transfers are safe and easy to do.
What Should You Look For When Comparison Shopping For A Bank?
Ultimately this comes down to your own situation and what it is that you require from your bank. However, many people just starting out may not know what to look for.
To help you with this,we’ve included a list of questions you should try and answer during your search. We also offer articles that give a direct comparison between some of the nation’s top banks, and the accounts they offer.
- Do they have many branches in your area with decent hours?
- Do they offer access to a large network of ATMs you can access free of charge?
- Do they offer either low or no monthly maintenance fees?
- What sort of interest or APY do they offer for the money you deposit with them? What minimums are required for maintaining that percentage?
- Do they offer any signup bonuses, like cash or gifts?
- What is the wait time when contacting customer service?
- Do they have a secure website that is easy to navigate?
- Do they offer a mobile app? Does it offer a mobile check deposit?
- What are the minimum deposit requirements?
All good? We’ve got a lot more information to help you level up your personal finance.
