Every bank has different terms and offers for its account holders, but not every bank is right for every person. Where you bank can determine how quickly – and safely – you grow the money you keep in cash, rather than your various investment vehicles. This is why finding the bank that best suits your needs is essential – as is knowing what to look for when you’re ready to open a new bank account.
In order to keep your finances in order and grow your money properly, you’ll need to put in some effort to research incentives and differing interest rates among institutions and even individual accounts. The sheer information overload can be a lot to process. Still, the time you spend may be worth it, as some banks suit certain needs better than others.
Furthermore, once you put in the initial research to choose your institution, there are some steps you can take to better your relationship with your institution. This can lead to an improved financial situation as it comes to perks, exclusive rates, and other special offers.
In this article, we’re going to cover a few things to examine to make the most of your banking experience. From interest rates to the bank’s insurance requirements, we’ll clear up some of the most important perks you never thought to ask about.
1. Savings Rates
Before you make any other decisions, look at the interest rates of your bank in question. Then, check out the competition. While it may not seem like much, a 0.5% interest increase in a savings account can make a big difference over 20 years. Furthermore, different types of banks and institutions offer different types of accounts, which can affect your interest rates as well. Spend some time looking into which bank has the most appealing accounts for your needs to make the most of your banking experience.
2. Alternative Institutions: Credit Unions and Online Banks
Credit unions are not banks in the way that their account holders own them. Moreover, they are not for-profit institutions. For these reasons, they operate under different tax rules, which means they can offer lower rates on financial products. This allows credit unions to be more competitive when it comes to issuing various loans to members. Additionally, credit unions reinvest their profits into the organization or pay dividends to their members, which can be another advantage.
Online banks, on the other hand, have become more popular in recent years. Because they don’t maintain branches and operate entirely online, they often offer lower fees and higher interest rates on their accounts. For instance, some online savings accounts reach upwards of 2% interest, whereas the average interest rate with a brick-and-mortar institution comes to 0.01%. However, online banks have their own limitations, such as smaller range of financial products. It’s also not always easy to seek assistance if you encounter issues with your accounts – which is why thoroughly researching your options is essential.
3. The Bank’s Insurance
This may not seem like a big deal, but knowing where your bank ensures your money is essential. Banks and credit unions alike should be FDIC or NCUA insured. The limits of this insurance differ, so research is necessary to make sure that you keep your money safe.
4. Minimum Balance and Other Account Requirements
For some people, minimum balances can sometimes be a struggle to keep up with during some times of the year. When those extra penalties do hit, this can make a difficult time that much harder. Therefore, you should research into minimum balances, withdrawal limits, transfer limits, and penalties associated with early withdrawals on specific accounts. Wasting your money away does not please anyone (except the bank). These unnecessary fees can be avoided if you do your due diligence in looking for the right bank.
5. Overdraft Fees (Or Preferably a Lack Thereof)
Look into a bank that offers overdraft protection. Whether or not you think you’ll need it, having the option gives you an added layer of protection on your accounts. These fees can be steep – and yet, they’re easily avoided with a bank that offers financial security rather than financial punishment. Therefore, you should look for a bank that’s not interested in charging excessive fees.
6. Rewards Checking Accounts
Some institutions offer reward checking accounts, but they frequently come with a small monthly fee to hold your account. However, these banks may offer great incentives, such as:
- Sign-up bonuses
- Sigh-percentage interest yields
- Reimbursements for ATM fees
- Airline miles
- Other various rewards programs
These accounts can offer great passive income or other perks for just using your own money.
7. Mobile Banking
According to a 2017 research study conducted by the Federal Reserve Board’s Survey of Household Economics and Decision Making (SHED), only 61% of the people admitted to using their mobile phones to access a bank account balance or look at a transaction in the previous year.
Mobile banking can offer many perks such as alerts to pay bills or check a low balance. Many times, these apps also keep you up to date on banking news and financial product offers. In addition to this, many mobile banking applications have a Bank2Bank function, which allows users to transfer money between each other (at no cost!) via a phone number and email.
8. Account Signup Bonuses
Everybody loves free money, and it doesn’t get any sweeter than a bank that gives you cash just for signing up. When looking for the best bank account for you, take some time to shop around for lucrative signup bonuses. While you shouldn’t make your decision solely on a free handout, this bonus may be the icing on the cake. (Or at the very least, the tiebreaker you’ve been looking for.)
9. Multiple Account Allowances
Whether you’re looking to split your paychecks by bill, save for a car, or put money toward longer-term goals, the ability to have multiple accounts or sub-accounts can be invaluable. It may seem silly, but diversifying your bank portfolio like your stock portfolio may be a wise decision for some.
From varied interest rates to the idea that you “can’t touch this account!”, splitting your funds can carry multiple advantages. Therefore, you may want to look for a bank that allows you to automatically split deposit checks into multiple accounts. Alternatively, you may want to split the money yourself (which is where #10 comes into effect).
10. Free Transfer Fees (ATM Fees, Bank to Bank Transactions)
Unnecessary fees can ruin your day. Looking into low or no ATM or bank-to-bank transfer fees may not seem like a big deal, but if you use these options frequently, the amount can add up quickly. Therefore, if you make a lot of withdrawals or move your money between accounts often, look for a bank that lets these fees slide.
11. Business Account Perks
If you’re a business owner, it may be worth looking into banks that offer great deals on their business accounts. Having a business checking account makes life easier for business owners. Furthermore, these accounts often come with extra advantages.
For example, a business account allows you to easily track expenses for tax and deduction organization. Additionally, as a business, you can allow multiple users on your account. This makes running your business – even if it’s just you and your spouse – more efficient.
12. Other Perks, from Coin Counters to Member Rewards Days
Have you ever wanted to exchange your coins for cash without the excessive surcharge on coin-counting machines? Some banks offer this perk for free. While, again, you shouldn’t base your decision on this perk alone, this can be a pulling point for some people.
Some banks also offer “member reward days” throughout the year. On these days, branches may host events, offer specific rewards, or implement a reward system based on various financial factors. If this perk sounds like a make-or-break deal for you, look for banks that explicitly offer added rewards for your membership.
A Final Word on Making the Most of Your Banking Options
Knowledge is powerful, especially when it comes to money. If you’re going to trust a bank with your money, confidence, and business, you should know the bank well. This means understanding everything from what perks are available to how your accounts work and interact with each other. Furthermore, by increasing your financial IQ when it comes to knowledge of your bank and accounts, you’re readying yourself further to take that first step into bigger financial decisions – such as investing in the stock market.