Just because a bank is right around the corner from your home or office, doesn't mean it's the best bank for you.
Here are some tips from the Better Business Bureau to keep in mind when choosing or changing banks.
"Relationship Banking" vs. Shopping Around
Some banks encourage their customers to hold all of their accounts with the same bank, known as "relationship banking." This is beneficial if the bank offers an incentive for consolidating your accounts to reach the free checking minimum or other special deals. Otherwise, you may want to consider having separate accounts at different banks to find the best deals.
Using your own bank's ATMs are usually free, but the fees for taking out money from other ATMs can add up, both from your own bank and the one you do not have an account with. Know your own pattern of ATM usage; if you normally use an ATM multiple times a month, it might be smart to shy away from an account that charges high ATM fees.
*If you are a First Niagara Bank customer who is switching over to Northwest Savings Bank, there is no charge to withdraw from other bank ATMs.
*If you are switching over to Northwest Savings Bank, withdraws from an ATM that does not have the KeyBank logo on it are charged a $2.50 foreign ATM fee.
Minimum Balance and Maintenance
Know the minimum amount you need to keep in your checking or savings accounts. Most banks require balances of $1500 or more, otherwise you will be charged a fee. Consider the costs of the fees saved and compare them to the amount of interest you might accrue if that same $1500 was placed in a savings account or CD.
*If you are a First Niagara Bank customer who is switching to Northwest Savings Bank, you will earn interest by keeping an average daily balance of $1500 in your checking account.
*If you are switching over to KeyBank there is a $0 monthly maintenance fee associated with their personal checking accounts.
All banks in New York State with personal banking services also offer "lifeline" Basic Banking Accounts. These are low cost accounts that must offer the following:
- An opening deposit of no more than $25
- A minimum balance of no more than one cent
- A monthly maintenance fee of no more than $3
- Unlimited deposits at no charge
- Eight withdrawals (checks, bank withdrawals, ATM) per month
Check the rules related to these Basic Banking Accounts at the bank you are considering joining - each bank can add its own rules related to direct deposit and and other fees or bank services. Some banks require customers to close all other bank accounts in order to open a Basic Banking Account.
Interest Bearing Checking Accounts
Consider the costs and benefits of interest bearing checking accounts versus savings accounts or CDs. Consumers usually earn more interest with savings accounts or CDs, but if you usually have enough money in your checking account to meet the minimum balance and avoid paying fees, it may be smarter to gain interest on that money. However, if you don't usually meet the minimum balance requirements, an interest bearing checking account may have higher monthly maintenance fees than a checking account that does not earn interest.
Many banks have special accounts for children, students and senior citizens, and special savings plans such as "Christmas clubs" or vacation plans. Special accounts normally do not have any fees.
Fees for Special Services
Banks are starting to charge for more services, so keep an eye out for those extra fees and consider how often you may need to use certain special services.
Overdraft protection is a service more banks are offering. Make sure to read the terms of agreement carefully before signing.
Banks are also encouraging customers to use direct deposit services and often offer reduced or waived monthly maintenance fees, free ATM usage and other incentives for signing up for direct deposit.
Charges Per Transaction
In addition to monthly maintenance fees, some banks will charge fees per transaction, like writing a check, moving money from one account to another, checking balances at your ATM or withdrawing money from an ATM. These usually cost about $1 or less per transaction (if you use your bank's ATM) but these charges add up. Keep in mind how often you use these services.
Many banks are going paperless and offer all banking services to be completed online. Ask whether your bank charges a monthly access fee for these services. If you decide to use online banking to pay your bills, your bank may charge a monthly fee for this, ranging from $4.50 to $6.00, though some offer this for free.
If you use an online bank, check the web site's "About Us" page to see if they have physical offices in the United States. Make sure deposits with the bank are covered by insurance through the Federal Deposit Insurance Corporation (FDIC); look for the FDIC logo or the words "Member FDIC" or "FDIC Insured" on the site. If you use a bank chartered overseas, the FDIC may not insure your deposits.
Make sure transactions through the online bank will be secure. In the address window of your browser, check to see that the first part of the online bank's web address changes from "http://" to "https://;" and check that the lower corner of the web page shows a lock or key symbol to signify security.
Bank mergers can change a bank's policies and fee structure overnight. The merged institution will usually keep the higher of the two banks' fees. Take the opportunity to check out other banks.
*Remember, you, as a consumer, have the right to change banks at any time and for any reason. If your banks changes its policies, increasing your fees, or your branch closes, don't be afraid to check out other options.