Picking a bank can often be a confusing and stressful process for people who aren’t really familiar with how finance stuff works. What’s worse, everyone seems to have a differing opinion about who the best banks are, and even then there’s no bank that doesn’t come with some sort of caveat or horror story. In order to help you find a bank that’s right for you, we’ve compiled a few tips below:
1. Start by thinking about you.
This seems really obvious, but a lot of people don’t know what’s relevant or what influences service and banking rates. A good way to start is compiling a list of your assets. These can include any money you have in the bank, stocks or bonds, and property you own. Then start a list of your debts. College loans, car payments, etc. Finally, it is very important to know and understand your credit score. Your credit score depends on a number of factors, including your payment history, how often you apply for additional credit, and how long a credit history you have. (You’ll get the best deals if it’s 10 years or more). It is also important to keep your credit card usage at 10% or lower to achieve a good score. Once you understand yourself, you will be well poised to start step two…
2. Shop around. Alot.
The simple fact is, every bank you walk into is going to tell you that they’re the best bank. (They do this even if you don’t qualify for a lot of what they have to offer)! In order to fight this salesy gauntlet, we recommend going into every bank with a list of questions based on your specific needs. For example, if you own a home or are thinking of buying one, ask the bank about its mortgage rates and policies. If you live abroad or travel frequently, make sure the bank’s online banking rates are fair and that you have access to an online checking account. Once you do some digging you will start to see the differences. For example, one small time credit union might not have an online presence or extremely expensive online banking rates, whereas a bigger bank might have cheaper online banking rates but not as good access by phone. Once you’ve weighed the pros and cons of each banking option and drawn yourself up a short list, you’ll be ready to look at contracts. But remember…
3. Read the fine print.
So many people get in trouble financially simply because they don’t read or understand what they are signing before they sign it. It was a huge factor in the great 2008 housing market crash, because people’s mortgage payments skyrocketed when the bubble began to pop resulting in a lot of foreclosures that could have been avoided had people opted for a more prudent mortgage plan. We spoke to one college kid who signed up with a credit card for her bank, except she actually thought it was overdraft protection and that her balance would automatically be taken out of her checking account every month. She ended up with a black spot on her credit and overage charges of over $200, all because she didn’t understand what she’d signed up for.
If all of this seems a little beyond you, please seek help from someone who has a little more financial savvy. It is so important to understand your money situation!