Choosing a Bank That Fits Your Needs

Man using atm at bank.

It's no secret that implementing a smart savings plan is the key to financial success, whether you are saving for retirement, college education, a new home or building a rainy day fund to prepare for unseen emergencies.

But have you considered that where you stash those savings can have a significant impact on your finances? Unexpected fees, repeated overdrafts and inaccessible funds can wreak havoc with your wallet. Smart savers will spend some time researching their banking options before opening a savings or checking account. A few matters to consider when choosing a bank

1. Choose a Bank with Low or No Fees

Don't Be Surprised by Hidden Fees

Before opening any account, ask the customer representative to see a written fee schedule. You may be surprised to find that the bank charges a fee for common items like a paper statement, checks, bill paying and a host of other items, even a fee for closing the account. If you are likely to use these services, opt for an account with minimal or no fees or look elsewhere.

Avoid Costly ATM Fees

Careless use of the ATM can be a costly mistake if your bank charges hefty fees. Banks typically charge $2 to $5 for an ATM transaction on another bank's network. Are you one who rarely uses cash, or do you have a habit of running to the nearest ATM to some quick cash for shopping or a night out? Do you travel often? Look for a bank that waives ATM fees or reimburses your account for outside transactions.

Be Aware of Maintenance Fees and Minimum Balances

Depending on the type of account, your bank may impose a maintenance fee if your balance falls below a specified minimum threshold on any one day of the statement cycle. Find out whether you can meet the threshold by linking your savings and checking accounts. Some banks may waive a fee provided you make qualifying direct deposits into your account, or if you qualify for a student or senior account.

2. Compare Annual Percentage Yield

Do some online research to compare annual percentage yield, or APY. This is the interest rate taking into account interest compounding (i.e., when you earn interest on previously earned interest). Though rates these days are quite low, these do vary by bank. Watch out for promotional rates that seem attractive but will expire.

3. Explore Online Options

Most banks have some form of online banking to facilitate services like transfers between accounts. If you're likely to do much of your banking on your phone or PC, consider whether your bank offers useful online services such as remote check deposits by taking a photo with the bank's app. Online-only banks like Ally Bank and Capital One 360 may be an option for you. With their reduced overhead, online banks sometimes have lower fees and higher interest rates.

4. Protect Your Savings

Of course you want your money to be safe. The Federal Deposit Insurance Corporation (FDIC) insures your bank deposits if your bank were to fail. Use FDIC's BankFind to locate FDIC insured banks. The FDIC cover up to $250,000 per depositor per bank, so amounts over that amount should be deposited in another bank.

5. Convenience and Customer Service

It may seem obvious, but choose the bank that best meets your needs. Is it conveniently located to your home and/or workplace? Are there evening and weekend banking hours for lobby services? Is there a conveniently located and accessible ATM?

You should expect excellent customer service in person, online and by phone. Read the online reviews, and ask your friends and neighbors about their experiences.

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