What to Consider When Choosing a Bank Account
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Choosing a bank account can sometimes be an overwhelming task. There are many different financial institutions and many different kinds of accounts to choose from. Finding the perfect account will depend a lot upon your personality and your financial needs. However, no matter which kind of account you are looking at, you should keep in mind the following considerations:
1. Fees. What fees does the account charge? Are there monthly service charges? Overdraft fees? Bounced check fees? Wire transfer fees? Money order fees? etc. etc. etc. Fees can add up to a significant amount of money. Choosing a bank or credit union with lower fees will benefit you in the long run.
2. Minimum Balances. Does the account require a minimum deposit or require you to maintain a minimum balance? Are you able to realistically keep that balance? If you cannot, you will likely be charged an additional fee or lose your interest for the month.
3. Interest Rates. How high is the interest rate on the account? Remember, the rate itself only tells you one piece of information. To truly compare interest rates, you need to know how often interest is compounded. The more often it is compounded, the more you earn in interest. Try to find an account that is compounded daily or even continuously, if possible.
4. Other Requirements. Does your account require any other requirements and can you meet those requirements? For example, my rewards checking account requires that I make ten debit transactions during the month to earn my 5.85% interest for that month (otherwise I would earn 0.2% interest). Requirements are not always a bad thing, just make sure you can meet them.
5. Bank Services. What services does the bank or credit union the account is housed in offer? Do they offer broker services? Online banking? Paperless statements? Direct deposit? Make sure the bank will meet your needs.
6. Locations. Is the bank or credit union located in a convenient location? Can you access your account online?
7. Security. Will your money be safe at this bank or credit union? Is the location physically secure? Is your account FDIC or NCUA insured? If it is not insured, stay away from it.
8. Incentives. Does the account offer any incentives for signing up? Is there a sign up bonus? Is there a referral bonus? For example, ING Direct offers a $25 bonus when you sign up for an Orange Savings Account with a $250 deposit if you sign up through a referral link (there are referral links on my Make Money Online page if you want one). While this should not be your primary consideration, it can definitely break a tie between two equally attractive accounts.
If you keep in mind these considerations, you are sure to find an account that meets your needs! Are there any considerations that I missed? Make sure to let me know!
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