The concept of banking has been around since the minting of currency. The banking system has survived through the heavy regulations brought on by the great depression and has evolved through the deregulation of the 1980s into what we have in place now.
The alternatives are innumerable when it comes to where you transact your finances. To choose the option best for you there are numerous questions you must ask yourself and a bit of research to do to provide for a sound decision fitting your needs best.
How do I choose?
Whether you are a traditionalist, baby boomer, genX or a millennial your banking needs and wants will most likely be different. So first, ask your self what is most important to your specific needs in banking. Important criteria would include convenience, fee structure, technology requirements, banking habits, customer service, and investment options.
Answering those questions you should come up with a list of decision points similar to this:
- Type of accounts
- Fees and rates
- Account access
- Customer service
Notice the bank’s finacial security is not on this list. The finacial security of the bank is not an option in your decision it is a requirement. The FDIC insures banks and the NCUA insures credit unions. You can check with these organizations to get a report of most institutions financial outlook.
A closer look
Types of accounts
Banking today is more than just checking, savings and loan accounts. You now have various investment instruments and credit cards to add to the mix. Furthermore, within each of those account types, there are various mutations. For example, some checking accounts have an interest-bearing feature with a minimum average balance.
The key here is to inventory what accounts you currently have and what you may want in the future to assist in your banking decision. If you have a wide variety of accounts there is nothing that prohibits you from spreading these around to multiple banks, but if you want one-stop shopping a large Retail Bank would have all the options within their suite of offerings. If you have basic needs such as just a checking or savings account a Credit Union or Community Bank might be a better option as their fees are typically lower.
Fees and Rates
Fee-based income has been a significant stream of revenue for the banking industry for quite a while, so don’t look for it to abate soon. Fees are assessed on accounts in multiple ways: usage, minimum balance, ATM usage, overdrafts, transferring funds and even sending paper statements.
Size and frequency of these fees vary tremendously from institution to institution. Do your research, most banks have their fee structures on their web sites but if not they are required to provide you these fees.
There are ways to circumvent some of these fees depending on what the bank offers. Some bank wave fees if you have multiple accounts with them, overdraft protection is an option but due diligence is required to determine the cost benefit as it is somewhat expensive. You can also utilize offerings such as low balance alerts allowing you to take a pro-active approach to avoid overdraft charges.
The rates of return you accrue once again will vary and finding what works best for you will require research. Some accounts require a minimum to earn any interest on the deposit. Others have withdrawal restrictions.
Credit Unions and Community Banks typically have both lower fees and higher rates.
As we have progressed into a more ‘need it now’ environment, account access has become more important to your decision-making process. If you are more comfortable dealing with a human at a brick and mortar, skip this section, if not read on.
If you have a requirement to make deposits on the run you will need a bank that offers remote check deposit through a mobile APP. Yes, you can make deposits through ATM’s but typically only your bank’s ATM. Additional features may include the ability to remotely turn off your debit card, quick balance, customizable account alerts, statement summaries, branch locator, transaction details and even credit monitoring. How many of these features you need will help determine which bank offers the best APP.
Online banking has become the norm. From the bank’s web site you can perform many of the transaction you could at a branch. You can check your balance, print statements, transfer funds, set up or cancel direct debits, and initiate ACH bill pay The services will range from minimal at Community Banks to a plethora of options at Retail Bank.
Your lifestyle probably dictates the most determining factor in accessibility. If you travel a lot you will more than likely need to have the ability to withdraw funds. Even if you do not travel frequently but use cash on a regular basis the need for access to ATM’s in important. There are ATM’s located everywhere, however, you may be charged a fee to use them if they are not your bank or out of your bank’s network. Further, you may get charged two fees, one from your bank and one from the owner of the ATM. Once again research is the key.
Once you have determined your needs look at the number of locations of both branches and ATM’s for the bank you are reviewing. Usually, Retail Banks have more branches and ATM’s also participate in large ATM networks that span the country. The largest networks are Star and Allpoint. Credit Union’s have a similar network in CO-OP Finacial Services.
This topic is subjective at best. What one person’s wonderful experience might be another’s nightmare. You can validate that just by reading any Yelp reviews on a restaurant. Good customer service representatives have patience, they are attentive, communicate well, they know their products but the great ones know how to read what you want. Outside of trusting word of mouth or other means of review, the only way you will determine the customer service level of a bank is to talk to them. By simply calling or visiting them and asking about their portfolio of products and services you can get a pretty good idea of the commitment to customer service. A couple of calls to different branches ensure you get a well-rounded perspective.
After gathering all of the data you’ve deemed important to your decision, it is time to choose. Decide on what criteria is most im[ortant to you and which bank comes closest to fulfilling all of these needs. Before you decide, call or visit an additional time to confirm your previous experiences with customer services. Verify the fee and rates schedules you received are accurate and make your decision.
Type of Banks
Retail banking, also known as consumer banking, refers to the services banks provide to individual customers. Common retail banking services include checking and savings accounts, mortgages, credit cards, and auto loans.
A credit union is a member-owned financial cooperative controlled by its members and operated on the principle of people helping people, providing its members’ credit at competitive rates as well as other financial services, including checking and savings.
A retail bank that derives funds from and lends to the community where it operates and is not affiliated with a multibank holding company.