Most people don’t apply much effort when choosing a bank and only think of it as a place to deposit money and withdraw whenever required. It might be true to some extent, but picking the right bank is crucial since making an ill-informed decision can turn out to be rather costly.
Here are 6 things about banking you need to know so you can get the most out of the decision you make.
1. Maintenance Fee
Most banks charge a monthly maintenance fee on their checking accounts. This unnecessary fee can be avoided by taking a couple of different approaches. You can either deposit money directly into your account and avoid maintenance fees, or ensure that your account balance does not fall below the minimum required balance. You will eventually be charged a maintenance fee if your balance goes below the minimum account balance required.
There are a lot of banks out there with flexible requirements and only require a small amount to be deposited as a minimum balance. Therefore, it is always best to be aware of any requirements your bank has in place so you can use your account without difficulty or uncertainty. However, if you don’t have a deposit and still want to open a bank account, consider internet-only banks that don’t require you to deposit a specific amount or maintain a minimum balance.
2. Overdraft Protection
Banks can hit you up with an overdraft fee if you try to withdraw an amount more than your current account balance. To avoid being charged this overdraft fee, banks encourage customers to link their credit cards as it’s a cheaper option when compared to the fee. However, this method will also cost money because when you withdraw an overdraft amount, you will be charged an overdraft protection fee and pay interest on the borrowed money.
A better way to purchase while minimizing the interest rates is by using the credit card directly for the purchase. Many credit cards don’t charge interest on the borrowed money for some days, allowing customers to return the borrowed money without paying interest.
3. ATM Charges
ATM charges by banks are increasing by the day. If you ever need to use an ATM from another bank, you will be charged a transaction fee that can be completely avoided. Many local banks tend to be more involved in your community, so consider opening an account with a local bank near you. Doing this will give you more reliable access to the bank’s ATMs and customer service services, helping you avoid any additional transaction charges or mishaps.
As mentioned above, local banks are more involved in the community and can therefore provide you with better banking services.
4. Savings Account
Many brick-and-mortar banks give you extremely low-interest rates on your savings. Almost every traditional bank can pay you a maximum of 0.01%. Internet banks are a better option as their interest rate can go up to 1%, ensuring that the value of your money stays protected.
5. Credit Scores
Most people are familiar with how credit bureaus and credit scores work. However, you might not know that traditional banks also have a credit scoring system for checking accounts. Whenever your cheques get bounced or you fail to pay an overdraft fee, your score will decrease. Too great a decrease in the score can even bar you from availing of banking services.
To be on the safe side and to avoid getting a bad score, always make sure you have cleared any pending overdue payments so you don’t have to face any problems when opening up an account. You can even contact your bank or the relevant credit scoring authorities and request a yearly report on your status.
6. Credit and Debit Card Issues
Bank card theft is on the rise and there are few worse situations than having your credit or debit card stolen. With bank card theft, the card remains physically with you, but the information on the magnetic strip and its pin code gets stolen. The fraudsters then use the stolen information to print a fake card and perform illegal transactions.
Different card companies have their own rules on liability and reporting of theft. Therefore, it is good to get familiar with the relevant rules so you will know the best course of action to take should you find yourself in such an unfortunate situation.
Nowadays, online banking has grown exponentially so choosing a bank that will provide quality services through its apps can also be a great choice to make. Besides the above-mentioned things, there are a lot of other rules, regulations, and services that you’ll need to get familiar with. We hope you find the information provided useful and that it assists you in choosing the right bank.