Choosing a bank to hold and service your money used to be a simpler proposition. Rates were similar, and the major consideration was convenience. Those days are over. The banking industry has consolidated (from 15,084 firms in 1984 to 7,842 in 2003), and fees have emerged as a constant threat to your account balance.
You now have to evaluate the -
- type of bank - commercial, savings and loan, credit union,
- size/style/location - national, regional, community/local, and Internet, and
- products offered - rates, fees, service levels, ATM’s, and on-line facilities.
Since the choice between banks can become quite confusing, it is best to take a step-by-step approach toward your selection(s).
1. Decide how you want to use the bank, e.g. long-term savings, short-term savings, on-line bill paying, convenience checking, etc.
2. Determine your comfort levels for -
- Convenience checking vs. On-line bill paying,
- National scope vs. local relationships for service levels and ATM’s,
- Interest rates vs. schedule of fees.
3. Select two products for comparison, e.g. long-term savings and convenience checking.
4. Use Bankrate to select a few institutions, at both your state and national level, that support each product. Sensibly, your selections should be limited to banks with ratings of four or more stars.
5. Go to the individual web sites of each bank to further investigate the specific details of the product offerings, bank locations, etc.
6. Visit a local bank branch, if possible, to verify the details.
7. Compare the details, select your institution, and open your account.
Using this approach, I made a selection of three banks -
1. A local bank for a convenience checking account that -
- has full access to on-line banking facilities,
- with a compensating balance on deposit, charges utterly no fees for foreign ATM’s, check printing, per item, or monthly service, and
- is small enough to recognize you as a name, not a number.
2. Two national Internet banks for long-term savings that -
- offer multi-layered security access,
- provide much higher interest rates than any local institution, and
- support ease of funds transfer and availability.
Other sites with information on this topic include - Guide from Met Life and Choosing a Bank
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