A tip from a trusted friend or relative, a little monetary incentive or even just the location can usually steer consumers to their bank of choice. But one look at the fine print can have potential customers re-thinking their decision. While Capitol Hill has banks scrambling to make up new revenue sources, consumers are usually the ones slighted as new fees means less banking value for your buck. With the savings rate up 5.8% in January, according to the Bureau of Economic Analysis—the highest since August—it’s important to make sure the financial institution you decide to do business with is giving you the best service. Here’s a checklist of questions you should always ask to ensure you’re getting the most out of a savings or checking account.
7 CHECKING ACCOUNT QUESTIONS
1. Does this checking account fit with my current banking habits?
Do you mostly write checks, use your debit card or use online banking? Regardless of which mode of transaction you prefer, you should make sure that your bank or credit union offers an account tailored to your needs without any added fees. Personal finance coach Dorethia Conner of Conner Coachingsays, “If you use a debit card a majority of the time you don’t want to be charged a fee if you go over five purchases [or the $50 spending limit],” which some banks now charge.
2. Can I maintain the balance?
Financial institutions have been known to use the term “free” loosely. Some banks require customers to maintain a minimum balance or monthly average balance in order to forgo a monthly charge. If you can’t afford to have extra money sitting around in your account to qualify then you should consider other “free” options.
3. Is this a place I’d like to conduct allmy banking?
Chances are, no. But understand there are customer advantages and disadvantages to opening up combo bank accounts (checking and savings). But is this right for the financial goals you’re trying to achieve? Having all your eggs in one basket might work for some, but based on your financial needs and your institution’s interest rates, it may work to spread your money around. For instance, you may get more mileage out of your money by having your checking account at a different bank than the one that handles your savings, based on their respective rates and fees.
4. Are the ATM fees exorbitant?
While most consumers are accustomed to a $2 to $3 fee when using an ATM outside of their bank’s network, some financial institutions are now adding fees to debit card purchases and upping ATM fees. Although the fees may seem small, a couple dollars here and there can add up quickly. Most people work hard for their money so don’t throw it away so easily.
5. Are my fees reimbursable?
As an incentive to get customers to open accounts, some institutions, such as HSBC and TD Bank, had done away with ATM fees, but this is no more. Other banks also promised at least one overdraft-fee-reimbursement per year, but given the introduction of new regulations these may soon be a distant memory as well. Still, it doesn’t hurt to ask.
6. Is the fee structure clear and understandable?
Know the policies if you overdraw your account. “Some banks can charge interest on the overdrawn amount, on top of the fee, if the account is not repaid immediately,” warns Conner.
7. Can I negotiate?
Don’t just read the fine print, be sure to actually talk to a banking representative. “Make the bank answer your questions,” says Conner. “Challenge their offerings. You can negotiate the best offer for your banking needs.” Doing so will also give you an insight into their customer service, which will be key should you have a pressing issue or financial emergency.
7 SAVINGS ACCOUNT QUESTIONS
1. Does this account fit my banking habits?
Just like with a checking account you have to ask yourself (and the prospective bank) similar questions: Do you prefer meeting face-to-face with a teller or quick transactions online? How often do you tap into your savings, if at all? Do you prefer setting up automatic withdrawals or managing your account with a passbook? Your personal preference(s) play a major part in selecting a bank.
2. How accessible are my funds?
How easy is it for you to access your money? Convenience can be a major factor for some when choosing a financial institution. But the particular account you desire, such as that high yielding savings account, may only be accessible online. If you’re not a tech savvy individual then that may not work for you in a financial bind.
3. Does interest matter?
While most of us want the best rate of return on our money, if you’re going to be pulling money out frequently, the interest rate may become a non-factor. But if you’re truly saving for a rainy day it’s best to make that money work for you by shopping around for the best interest rate. Check out Google, Money Rates or Bankaholic for the best rates in your area.
4. Are there free transfers?
Some institutions charge a fee for transferring funds from another institution. This is an important question to ask if you plan on consolidating funds at some point or need to make a quick transfer between banks.
5. Can I afford the minimum?
Some high-yielding savings accounts require a minimum initial deposit or a minimum balance in order to maintain the account. The idea of saving is to tuck money away for major investments and unexpected catastrophes. Setting those funds aside should never put you in the red because the required minimum is too high.
6. Are my transactions limited?
Find a savings account with an unlimited number of transactions—deposits, withdrawals and transfers. Consider the number of transactions you make each month and if the bank’s cap is under your normal transaction average you don’t want to wind up penalized for what’s essentially your day-to-day financial dealings.
7. Does my local credit union offer a better rate or better services?
While banks may be the first place many consumers look when it comes to stashing their cash, credit unions often offer competitive rates. Also, depending on the account, your local credit union may offer fewer fees. As with anything, shopping around for the best rate is essential.