It is time to go out shopping. Yes, you heard it right but we are not doing the every-day kind of shopping. We are looking at which bank one should choose. Choosing a bank is an important activity that everyone should approach with care lest you end up regretting your choice or worse even losing your money through unreasonably high charges among other things.
With the large number of banks to choose from, you may have a hard time trying to compare several of them to pick the best option for your particular needs. One thing to note is that different banks have different policies and offer different packages targeting different user groups. Selecting a bank requires that you asses your current and future financial needs to ensure you choose the right bank with favourable policies and infrastructure to cater to your requirements. To help you pick out the best bank for your needs we will show you 8 important things you should consider when choosing a bank.
#1. Product range
Every bank will have its product selection. These are banking services that you will eligible to access by signing up with a particular bank. While the selection may be close to similar across different institutions, looking at finer details of specific banks will show you that the products are issued under different guidelines and regulations. Some of the general features you may want to look for include insurance policies offered by the bank, digital, mobile and online banking, business banking, and mortgages. Well established banks will generally have a wide selection probably with better terms.
Traditionally, a bank’s accessibility is measured by the number of physical outlets and their distribution relative to the population. This has however changed with the inclusion of technology in banking where now accessibility determinants include the availability of ATM outlets, mobile and internet banking services, and the ease of use of such systems. You need to consider the convenience of accessing a physical bank branch and the convenient location of ATMs. Mobile and internet banking should make it easier to transact without interacting with bank staff directly. Another key factor related to accessibility is the availability of excellent customer support services. While all banks will tend to have customer support, it is worth noting that big national banks tend to delegate this to call centres which may be a headache if you need help.
#3. Interest rates
This is an important determining factor on which bank fits your needs. Some banks will charge you exorbitant interest rates on loans while paying you very low interest on your savings. If you will have savings account alongside a checking account, you may want to review the bank’s interest rates on loans relative to the rate your savings will accrue interest. A good balance on this leaves more money at your disposal and you can easily achieve your goals. In the most general cases, credit unions are known to pay their members high-interest rates for savings while charging fairly low interest on loans.
Some fees and charges will be levied on your account regardless of who your banker is. However, the fees vary from one banker to another. Some of the general charges your account may be subject to include monthly maintenance cost, overdraft processing fees, wire transfer fees, and out of network ATM fees among others. Finding out the specific charges for the services you will frequently use should be one step in selecting the best bank.
#5. Credit unions
Credit union members enjoy a vast array of benefits even with a limited product selection. This is because they are member-owned and not for profit. However, to qualify credit union services or even to join a credit union there are requirements you need to meet. Most of the credit unions are based on the area of residence or place of work among other possibilities. Credit unions generally offer higher interest rates on savings and low interests on loans. Members are also able to get personalized support easily since they are well known in their local credit union. The downside with credit unions is the low product selection they offer. For example, not many credit unions have mobile and internet banking facilities. They are best suited in a situation where a large number of transactions involve savings rather than payments.
#6. Technology and safety
Technology is an essential tool for any banking system. It is a technology like mobile banking that improves the efficiency of bank services while making them accessible to a large population. The technology used for user verification and identification in a banking system should be adequate to ensure the safety of your hard-earned money.
Further on safety, you should only transact with a respectable bank that is insured under the Financial Services Compensation Scheme (FSCS). This ensures that you do not lose everything if anything happens to your banker.
#7. Read the terms and conditions
You should only open a bank account with a bank whose terms and conditions are in line with your objectives and plans. The terms should also be clear on what charges are levied on your account. Consider if there are any incentives for saving or borrowing from a particular bank.
#8. Personal financial habits
Your financial habits are important in choosing the right bank. They are what determine how much fees the bank will levy on your account over a particular spending period. Consider all the charges categories and how they affect your account. Are there charges levied on deposits or payments received? How much are you charged for wire transfers and how frequently do you wire money? While you may not have control over some of the habits, you can find a bank with low charges to cater to your needs.
There are many banks with the infrastructure and technology to serve any kind of financial need. Selecting one bank out of the pool may be difficult in different situations. The available products, the accessibility of the bank, and the interest rates are among the top things to watch when choosing a bank. Big national banks will generally have a wide selection of products and sometimes flexible terms that make them more convenient compared to credit unions and other small banks. However, credit unions and small banks are more accessible ready to work with members on tailored products. The final decision of which bank you choose should also be guided by your financial habits.