Tip of the Week:

Selecting the Right Bank

Your money is important, and how your finances are handled will either make your life much easier, or cause untold amounts of frustration and aggravation. Choose the right bank and give your finances a much needed boost. Not all banks are the same, and not all of them offer the same kind of returns and programs for your financial need. Choosing a bank just because of its location could mean you are missing out on some important benefits. While convenience is important, it shouldn’t be your only factor. Consider these aspects when selecting a bank.

Interest Rates and Fees Charged
Like many other businesses, banks want to be competitive. Interest rates are one way they entice new customers. It is not uncommon for the savings account interest rates to vary widely, but the majority of institutions make adjustments according to changes in the federal funds rate.

You might think interest rates are inconsequential. But when substantial deposit amounts are involved, the difference can be significant.

Banks are also famous for charging fees for particular transactions. For example, a checking account may only allow a certain number of checks to be written each month before a fee is assessed. Sometimes, a minimum balance is required to keep the account active.

There are also banks that offer free checking and other options. Make sure, however, that the free checking is really free. There may be stipulations such as being required to keep a minimum balance in the account at all times.

Look at a fee schedule to determine if it is acceptable to you.

Personal Convenience
Banks with multiple locations in convenient areas are important. If you travel frequently, check if your local or regional institution is a member of a national network.

Also, ask about their online banking policies. Is their website easy to navigate and secure? Online banking can be a great way to pay bills and transfer money between accounts.

Overdraft Safeguards
Everyone makes mistakes. Accidental overdrafts happen occasionally. Each financial institution has a different policy about these matters. Some banks might offer overdraft coverage in the form of a high-interest credit line. Other banks charge fees each time an overdraft occurs. Sometimes, banks provide no coverage. Be sure to research overdraft policies before making a final decision.

Institutional Stability
These days, it is important to consider a bank’s stability. Before you entrust your money to an institution, check its history and financial condition. Typically, banks invest deposited funds under a fractional reserve banking system. Any bank with a strong balance sheet should be able to weather any turbulence caused by market corrections. The majority of banks are insured by the Federal Deposit Insurance Corporation for up to $250,000 per depositor. This value can vary depending on the type and number of accounts held by a customer. Provided you understand and act within these safeguards, your money will likely be safe in a bank. That is not to say that failures are impossible. A solid bank will limit exposure to toxic assets that put its balance sheet at risk.

Services You Need
Most banks offer a variety of services. Whether you need to get a loan or open a checking account, choose a bank that fulfills your needs with the fewest fees. It should offer the maximum conveniences possible. Careful and vigilant shoppers will have positive experiences by making an effort to choose a trustworthy commercial bank.