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Ask the expert: what to focus on when shopping for a bank
Q: Your web site encourages people to shop around for their banks, but it isn't clear how we are supposed to do this. In some ways, the problem is too much information--so many different products, different fees, different interest rates. What is most important in choosing a bank?
A: With banks adjusting their fee schedules these days to adapt to a changing financial and regulatory environment, knowing how to shop for a bank may be more important than ever. There is no shortage of information available, but how do you sift through it all and make the right decision?
The best way to begin is not by looking at the banks, but by looking at yourself and how you use a bank. Here's an example of some questions you should ask:
- Do you keep a large amount of money on deposit? If so, interest rates will be of paramount importance. You should shop for the best interest rates on savings accounts or money market accounts. If you tend to have long-term savings on deposit, then finding the best CD rates will be especially important.
- Do you have a relatively small checking account? In that case, you need to look for a bank still offering free checking. The number of these accounts has declined, but they have by no means disappeared. If you are a student or over age 50, you may find you qualify for special free checking accounts which cater to those groups.
- Do you tend to overdraft your account? If so, the best advice would be to opt out of the overdraft program altogether, to cure yourself of this bad habit. If you can't bring yourself to do that, then you should look for a bank with relatively low overdraft fees.
- Do you travel frequently? If so, look for a bank with widely-distributed ATMs, or policies for reimbursing out-of-network ATM fees.
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