You are now prepared to begin keeping your funds in a bank account. However, if you don't currently have a bank account, you could be unsure about how to pick one. What ought you to think about? How do you begin? With so much at your disposal, how can you break through the clutter?
This post is intended to simplify the process of selecting a bank for the first time and assist you in managing your hard-earned money more effectively.
Examining Bank Account Worlds
You can reserve money in a bank account for later usage. However, you can open multiple kinds of bank accounts. Here are some common kinds of bank accounts you might come across if you're new to banking and personal finance.
Checking Accounts
The purpose of a checking account is to store money that you will later spend. You can pay with a debit card in person or online with a bank account and debit card. Additionally, debit cards can be used at ATMs to make cash withdrawals.
Paper checks are a feature of some checking accounts, which you can use to settle debts or give money to loved ones. Some accounts allow you to move money from your bank account to another person's.
Savings Accounts
A savings account is a type of bank account that you can load with money, usually to help you reach a certain financial objective. Interest can be earned on savings accounts, allowing you to increase your money.
By your bank, you may be able to add money using:
- Deposit cash at an ATM or branch
- Direct deposit
- ACH transfer from a linked bank account for mobile check deposits
- Wire transfer
Savings accounts are not meant to be used for daily purchases. Holding onto your money until you need it for a goal or an unforeseen need, such as an unexpected medical bill or auto repair, is the idea of saving.
Your monthly withdrawal restriction from a savings account may be imposed by banks. You might, for instance, be charged a fee for each withdrawal beyond the first six that you are permitted. If you wish to spend money or pay bills without having a monthly cap, you might require a checking account.
Certificates of Deposit (CDs)
A time deposit account is a certificate of deposit. To put it simply, that means what follows:
- CDs allow you to make a one-time or ongoing deposit.
- Interest is paid to you by the bank throughout that time.
- When the CD "matures" after the term, you can withdraw both your initial deposit and the interest that has accrued.
However there is a catch, CDs may offer competitive interest rates. If you take money out of your CD before it matures, you may be charged a penalty.
Money Market Accounts
A savings account that has certain checking account features is called a money market account. Sometimes interest rates on balances are higher than those on CDs or standard savings accounts.
You might be able to write checks and receive a debit card from your bank to make purchases and withdrawals.
There is a monthly cap on the number of withdrawals you can make. If you want to earn interest on balances while maintaining some degree of flexibility in how you access your money, you may want to consider a money market account.
What Should I Look for in a Bank?
The process of selecting a bank involves many factors. Since many banks and other financial organizations provide comparable services, it's important to know what qualities to search for in a reputable bank. Take into account the following attributes, offerings, and accessibility:
Low Fees
Monthly maintenance fees, ATM fees, and overdraft fees are extra expenses that can mount up over time, particularly if you're careless. Remember that because maintaining physical locations incurs expenses, traditional banks typically charge greater bank fees than Internet banks. Therefore, it could be preferable to search for an account with little or no fees if you're trying to save money.
Check the cost of a bank you are thinking about using offers overdraft protection to see if signing up is worthwhile. Certain banks may charge a fee each time they move funds from savings to checking to address overdrafts, but others might not charge anything at all for this service.
High-Interest Savings Rates
If you want to obtain the best value for your money, interest rates might matter. Start by investigating banks that provide high annual percentage yields (APYs) along with a high yield. Even the tiny things can add up over time, even though they might not seem like much at first. Apart from a high-yield savings account, you may be able to make money through:
- Checking accounts
- A money market account
- Certificate of deposit accounts
- A cash management account
Examine the rate sheet provided by the financial institution to find out possible earnings for various bank account choices.
Online Accessibility That Is Easy to Use
It's critical these days to be able to access, manage, and transfer money online with ease. To manage your funds without always visiting a physical branch, search for a bank with an excellent mobile app and website.
When it comes time to transfer your wages into your account, signing up for direct deposit might save you time. A mobile check deposit might be your employer's best option if they don't offer that.
Knowing What You Need Is the First Step in Choosing the Correct Bank
Keep in mind that every person has a different set of priorities when selecting a bank. What you need most will ultimately determine whether it makes sense to use a traditional bank, regional bank, credit union, online bank, or neobank.
Contact Notebanks right away if you have any more questions!