When shopping for a bank account, there are five key factors to consider.
1. Interest Rate or Return
The interest rate, or “rate of return,” represents the rate of interest — expressed as a percentage — that a bank or credit union pays on the money you deposit. With products such as certificates of deposit, the longer you agree to keep your money on deposit, the better the rate of interest.
Choosing a bank that offers a variety of ways to access funds and deposit money gives you more flexibility. For example, a bank that offers mobile-banking services or online banking might be helpful for people who don’t have time to drive to an actual branch to make deposits.
The number of available ATM machines is another convenience factor to consider. Big banks like Wells Fargo, which has 13,000 ATMs across the country, offer ample accessibility to customers. Such convenience is an important factor to consider when choosing a bank, especially because it’s likely to save you from fees that you otherwise might incur for using an out-of-network ATM.
3. Customer Service
Around-the-clock customer support is an important customer service feature. Banks such as TD Bank and many others offer 24/7 customer service to account holders.
4. Bank Fees
Typically, brick-and-mortar banks have some kind of fee structure. If you don’t need your bank to have a physical presence, online banks might be the way to go. Online banks can help you avoid fees for not maintaining a minimum balance, using out-of-network ATMs and more.
5. Other Banking Services
For basic banking products such as checking accounts, consider a bank that pays interest on your money. Online banks like Ally Bank pay interest on accounts without requiring you to maintain a minimum balance.
Choosing the Right Type of Bank Account for Your Needs
Your checking account is usually the vehicle for all ATM, debit card and automatic payments. At some banks, adding a savings account might help to keep monthly fees to a minimum. In the current environment, you are unlikely to find a savings account that pays a high-interest rate. Still, a savings account can be a good place to keep an emergency fund.
As you accumulate wealth, consider speaking with a trusted financial advisor about investing for a better return. An easy, risk-free way to build wealth is to limit your debt and to pay the lowest loan interest rate possible.
How do banks make money? One key way is by charging higher loan interest. Shopping around to get a lower rate helps you build your own wealth — instead of increasing the bank’s wealth.