Every adult needs a bank account, and ideally, you should have both a checking and a savings account. If you’re looking for your first bank account, you might be wondering how you’re expected to decide which one to go with. When you consider all of your online banking alternatives, almost every community has multiple banks and credit unions, and that’s just the tip of the iceberg.
Given that most Americans continue with the same bank for more than a decade, it’s critical to select a bank account that meets your needs. When it comes to your first bank account, there are a few things you should look for.
1. Type of Account
Banks offer a diverse range of products and services. Attempting to compare all of them at once may appear to be overwhelming. An excellent place to begin is by determining which types of accounts you want to open depending on your financial goals and priorities. Among the most common accounts are:
Savings Account
Savings accounts, as the name implies, can be opened by an individual or jointly by two persons to save money. The main advantage of creating a savings bank account is that the bank will pay you interest for doing so.
The following are some of the features of the Savings account:
- There is no limit to how many times the account user can deposit money into this account, however, there is a limit to how many times money can be withdrawn.
- The annual interest rate that an account holder receives ranges from four percent to six percent.
- This type of account does not require a minimum balance to be maintained.
- Students, retirees, and working professionals are the most likely to benefit from a savings bank account.
Current Account
These accounts are not intended to be used for savings. Its key features are as follows:
- Businessmen are the most likely to open this type of bank account. The current account can be opened by associations, institutions, companies, religious institutions, and other businesses.
- There is no limit to the number of times money can be deposited or withdrawn from such accounts.
- There is internet banking available.
- This sort of bank account has no set maturity date.
- For current bank accounts, an overdraft option is offered.
- There is no interest paid on these accounts.
Money Market Account
It combines the benefits of both savings and checking accounts into a single deposit account. A money market account often offers interest on balances as well as check-writing and debit card access for spending or bill payments. They will, however, implement the six-withdrawal restriction that comes with savings accounts.
Remember that, unlike checking and savings accounts, these carry a substantially greater interest rate. There could also be a significant initial minimum deposit requirement, ranging from $2,500 to $25,000. If you wish to earn a high interest rate, you must also maintain a high minimum daily balance.
Investment Accounts
If you want to invest in bonds, equities, or mutual funds, opening a brokerage account is the best way to begin.
Retirement Accounts
Individual retirement accounts (IRAs) and Roth IRAs are accessible for persons who desire to save for retirement. They are tax-sheltered accounts.
Certificates of Deposit
A certificate of deposit account is an agreement to keep your money locked up with a financial institution for a set period. In exchange, you will receive a greater interest rate. If you choose longer-term certificates of deposit, you may be able to earn a greater rate. CDs have a duration ranging from a few months to several years.
You can withdraw money from this account if you need it at any time. However, you will have to pay an early withdrawal fee or a penalty. If you believe you will need money soon, you should avoid these types of bank accounts.
2. Fees
There’s no reason to continue with a bank that costs a lot of fees when there are several banks that charge little or no fees.
Online banks are well-known for charging cheap costs. Because they have fewer (if any) branches, they have reduced operational costs and so don’t charge as many fees as traditional banks. Some ATMs charge free fees for some online bank cardholders.
Monthly maintenance costs, ATM fees, and overdraft fees are all things to keep an eye out for. According to Bankrate research, the average overdraft cost is $33.47. Even enrolling in an overdraft protection program (in which the bank pays an unaffordable purchase) can be costly. According to a 2017 Consumer Financial Protection Bureau report, consumers who use overdraft protection spend almost seven times more in fees than those who do not.
When looking for a new bank account, look for one with more flexible overdraft policies. And when you’ve found the ideal account, do the following:
Connect your checking account to another account at your financial institution so that if you run out of funds in your checking account, the bank will withdraw funds from the other account to pay the transaction. This may incur a fee, but it is usually less than an overdraft fee.
Sign up for low balance alerts on the website of your bank or credit union. These alerts, which you may be able to receive on your phone, will notify you when your account is about to be overdrawn.
3. Faster Money Transfers
Money transfer in banks can take some time, however, there are several ways that banks implement to make money transfers easier and faster. They include:
-
Zelle
Zelle can be used online, through the Zelle mobile app, or the online banking platforms of participating institutions. Zelle has partnered with the majority of the country’s leading banks, including Bank of America, Chase, Citibank, and Wells Fargo. Money can be transferred immediately from your bank account to the recipient’s email or mobile number.
-
PayPal
With PayPal, you may send, request, or collect money online or through the PayPal app. You can also use a PayPal credit, debit, or prepaid card, or credit line, to shop online. PayPal has both corporate and personal accounts available.
These features make money transfers easier since they can be easily linked to your bank account and the transaction is user-friendly and can be done online. With fast money transfer, you can just as easily apply for an online payday loan and receive it quickly into your account.
4. Accessible Banks
Another important issue in banking is accessibility. Most customers would want to consider the ease of ATM locations, branch location convenience, and the availability of the Internet and mobile banking. If you need to withdraw money from your account, the most convenient method is to use an ATM. And if you want to avoid paying an unneeded cost, you have two choices:
- Use an ATM at your bank. ATMs are frequently located across the largest banks.
- Use an ATM connected to your bank’s network. Some banks that do not have widely available ATMs may be members of an ATM network, and customers can use any ATM in that network.
You should verify a bank’s ATM possibilities in your city before opening an account with them if you don’t want to pay a fee when you need cash.
The location of your bank may not be as significant as the placement of its ATMs, because you’re more likely to utilize those. However, you should still try to find a bank that is close to where you work or live. A bank branch may be handy for a safe deposit box, notary services, or other reasons, so keep location in mind when making your decision.
5. Online Services
Having access to your account information whenever you want it, as well as the flexibility to monitor your transactions and plan transfers is a major benefit. A digital savings bank account is an instant account that can be instantly started online from any place. You can now open an account by following a few steps on the digital banking app.
Assured Security
Because Internet banking is one of the most important services provided by banks, it is also a very secure platform. Banks typically utilize encryption devices to ensure that all client information is secure and that no security breaches occur. Finally, it protects you from online fraud and account hijacking.
No issues with the access
Even if it is the last day of your bill payment and you are about to be penalized, you can rely on internet banking. Online purchases can be completed at any time of day from the comfort of your own home. Not only that but instead of having to be physically present for a large number of transactions, you can safely transfer funds at any time, without any fuss. You also have easy access to online payday loans if the need arises.
There are no hidden costs
Despite the added convenience, there are no hidden fees associated with Internet transactions. All you pay is a small transaction fee, and the rest is handled by your bank.
Find out if your bank offers internet banking and if there is a fee. Most banks nowadays recognize the need for online banking and offer it for free. You can also find out if your bank has mobile banking, which allows you to access your account using your phone. If you value convenience, online and mobile banking are musts.
6. Mobile Banking
Banks now provide online account access as a basic feature, but you should also search for one that offers an easy-to-use mobile app. You probably don’t want to pull out your laptop every time you need to check your bank account balance. A mobile app greatly simplifies the process of reviewing your balance and account activity. These apps frequently contain a mobile check deposit capability, allowing you to deposit a check or money order using your phone’s camera.
The following are some of the advantages of mobile banking:
- Check account balances, locate ATMs, transfer funds, and even deposit checks for your convenience.
- Saving time: There is no longer a need to visit a credit union location to accomplish the above-mentioned daily duties.
- Simple to monitor: Keep track of everyday transactions to avoid fraud.
- Budget-friendly: With your money at your fingertips, you can check your balance before spending and ensure you’re on track to fulfill your budgeting objectives.
- Mobile Deposit: Check depositing is no longer a chore. Simply take a picture of the front and back with your smartphone camera and a mobile app. The deposit processing time is the same as if you had taken the cheque to a branch.
- Apply for a loan: Do you require a credit card, a personal loan, or a car loan? There is no need to visit a branch when you can apply for financing via the mobile app.
- There is no expense to you: Mobile banking is a free service available to all Palisades Credit Union members.
7. Insurance
Insurance is how you would receive your money back if your bank went bankrupt. Although this is an unusual circumstance, it has occurred in the past, so you can never be too cautious.
Banks are insured by the Federal Deposit Insurance Corporation (FDIC), while credit unions are insured by the National Credit Union Administration (NCUA). Both types of insurance provide up to $250,000 in coverage per depositor, institution, and ownership category.
While any decent bank or credit union should carry insurance, you should double-check before opening an account with them. It is up to you to ensure that your bank is FDIC-insured.
Bottom Line
Choose a bank that offers minimal costs, flexible banking alternatives, and products that match your needs – as well as convenience at both brick-and-mortar locations and mobile app
technologies – when opening a savings or checking account with a new bank. This will make it easy to get the most from your new bank account. Eventually, it helps you avoid paying unnecessary fees.
