I live in one of the banking capitals of the world. Here you either work for one of the major banks or for city government. To protect the company that I work for, I will leave its name out.
I became surprisingly aware that many people did not know the basics for establishing a bank account with a local bank. So, I thought that I would place some basic information that you might want to know for when you go shopping for a bank for the first time (or if you're looking for a new one).
3 Things to look for:
Needs
What are looking for? A Checking (NOT "checkings") account, Savings account or Certificate of Deposit. Figure out what your needs are.
Definitions:
Checking Account (sometimes referred to as a demand deposit account) - a bank account against which the depositor can draw checks that are payable on demand
- Can sometimes be interest-bearing
- Allows access via check-writing or ATM/debit card
Savings Account - a bank account where money is stored and generally returns a relatively low rate of interest.
- Usually interest-bearing (usually a fairly low rate of interest
- Typically there is no access via checking-writing
- Usually allows access via an ATM card
Certificate of Deposit - a negotiable interest-bearing certificates by which a bank promises to repay money deposited with it for a specific time period at a specified interest rate. A “time deposit” in a bank, maturing on a specific date, and traditionally evidenced by a certificate.
- Usually interest-bearing (usually a higher interest rate, based on the length of time funds are deposited
- Limited-access to funds during fixed term
*** Rates are usually better at credit unions.
Cost
In today's world, if you need a checking account, you should have no problem finding a bank that offers FREE Checking...meaning no monthly service charges, with unlimited checkwriting. However, there may be charges for overdrafts, unavailable funds or early close fee (usually withing 6 months).
For Savings accounts, you may be able to find some banks that offer no-cost but only if you maintain a certain balance (either daily or average). You may be charged by your bank for withdrawing more than their required maximum number of allowed withdrawals.
Certificates of Deposit (CDs or Time Deposits) usually have no fee to set up. The main cost involved with this product comes in when you need to "break" the CD or redeem it before it matures. In these instances, you are usually charged some "early withdrawal" fee AND a percentage of the interest that you've earned (depending on how close to maturity you are).
Convenience
This is a very important one for me. Even though places like credit unions typically offer better rates they are usually based in only a few locations (many times in only one place). So, if you're a person that travels a lot, you may want to consider a larger, more well known bank that has locations all over the country. At least for your Checking account. This makes it easier to access your money when you're away from home.
Also, you want to make sure that they are a bank that offers Online Banking (preferrably with a Billpay option). You can't always make it down to the bank to transfer funds or get to a local payment center to pay a bill. Online Banking makes these and other tasks easier.
So, as not to make this post too long...I will revisit this subject from time to time with some helpful tips for you. I'll even get into some things that you'll want to know about borrowing money.
