Chapter 1: Where To Open Bank Accounts
Chapter 2: Which Type of Bank Account Should You Open
Chapter 3: Bank Account Interest Rates
Chapter 4: Bank Account Charges and Fees
Chapter 5: Online Banking
Chapter 6: Bank Account Facts
Banks and financial institutions not only keep your money safe, but also pay an interest on it. But banking can become your worst nightmare if you choose the wrong bank and the wrong account.
Whether you are opening an account for the first time, or need a new one because of one or other reason, you must consider a lot of factors like the services offered, interest rates, fees and charges etc before opening an account.
To maintain a hassle free relationship with the bank, spend some time understanding the nitty-gritty’s of banking, and opening and maintaining a bank account.
Where to Open an Account
Not all banks and banking accounts are similar. Different banks have different sets of rules, types of accounts and rates of interest. Banks can be large or small, depending on their reach, customer base and the services they offer.
Large banks – Larger banks, like national banks, have a variety of account options and services to offer to their customers. With their branches and ATMs spread out in various locations, you’ll have easy access to your money and you can shift your account with you whenever you move. However, large banks have an enormous customer base, which makes their customer service somewhat impersonal.
Small banks – Customer service is the biggest advantage of local or regional banks that fall in the category of small banks. They offer the basic checking or savings account with an ATM card, but have limited access.
A major problem with these banks is that they do not have many branches, so every time you move to a new place you have to open a new account in a different bank.
Choosing between bank accounts and other financial institutions accounts
Other financial institutions like credit unions also offer certain banking services. Here are small notes on some of these institutions:
- Credit Unions – Credit Unions are non-profits organizations owned and maintained by common members of a community such as a labor union, college alumni association or a company. The savings and checking accounts offered by these unions are more or less the same as offered by the banks.
In comparison to the commercial banks, they offer higher interest rates and charge minimal fees, but have fewer services with restricted access to ATMs and branches. Moreover, you need to be a member of that particular union to open an account.
- Money Market Mutual Fund Accounts – Money market mutual funds can fetch you higher rates of interest, but come with a risk, as they are not insured by the Federal Deposit Insurance Corporation (FDIC). You will need to have an opening deposit, anywhere between $500 and $5000, and also maintain a minimum balance.
Though most of the mutual fund accounts allow you to write checks, there is a minimum amount for that too, with a maximum limit for the number of checks you can write.
- Cash Management Accounts – Brokerages offer cash management accounts, which are a combination of a bank and a brokerage account to customers who want flexible investment options and a high interest bearing account to access their liquid cash.
Cash management accounts give you checking and ATM card facilities, with a higher rate of interest as long as you don’t withdraw above a certain line of credit. They also have an annual fee and brokerage charges for all your transactions.
Before you make a choice, make sure you understand how each account works and what their features are. Get an opinion from friends or family too. Also, ask yourself the following questions to check if you have chosen the right account for yourself:
What will you do with your bank account?
Figure out why you want a bank account. Is it for saving money or for easy withdrawals and deposits? Once you assess what your banking transactions would be, choosing the bank or institution that offers an account with all the services you want will become easy.
How do you want to transact?
The next thing is how you want to access and maintain your account. If you are net-savvy and have a busy schedule, choose a bank that offers online banking and has working hours that fit your schedule.
Is it worth the fees and charges?
A lot of banks and institutions offer accounts without any charges or fees, but the services offered for such accounts are limited. If you are willing to pay for convenient banking, compare the fees and charges of various banks and choose a bank that gives you your money’s worth.
How many accounts do you want?
The bank must be a one-stop-shop for you if you plan to open multiple accounts. Select a bank that offers a variety of accounts suited to your requirements.
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