Is it time to move out from your parent’s bank?
You could be moving off to college or maybe you’re getting your first job as a high schooler or first job out of school.
Picking the right place for your money may seem like it’s not that big of a deal, but it’s an important decision. There’s so many things to consider and honestly it feels like everyone is telling you their place is the best but how do you truly know?
Well, here are things you should look for when choosing which checking account is right for you.
Location, location, location
The first thing you need to consider is do you want a bank that has physical locations near you or is an all-digital bank more important to you?
If you like going to the bank to cash checks, move money around or to have a more personal touch by having a conversation with your banker, then a bank that has a physical location near you would be the best choice for you.
The easiest and best way to find a bank near you is to go on Google or Apple Maps and type bank. This can help you get a short list and get you to the next step very quickly.
A thing to remember with this is that you may not get the best deal out there because limiting your selections to just what’s around you only gives you a small list of potential banks.
If you would rather do your banking on a phone or computer, your options are going to be much bigger. Pretty much every bank nowadays offers digital banking to their customers. However, they’re not all the same.
When selecting a bank based on their digital banking, here’s what we recommend.
Start by googling who has the best digital banking app for the current year. When looking through the results, it’s best to trust reputable sources such as this article from Forbes. Make sure to check multiple sites so you can be sure to get a good idea of what banks are showing up on all the lists.
Pros of going all digital is that every bank is in the game for your money. However, you will have to do some research to sift through the bad ones and get to the good ones. Plus, some of these banks are only online such as SoFi and Ally. This means you might not be able to talk to somebody in-person because they have no physical locations. You can still use their online chat or call them if you ever need help.
Bank better have my money
Alright, you’ve got a short list of potential banks based on if the bank has a location near you or is only online/mobile. The next thing we need to think about is their ATM locations.
You may not think you need cash at all but what happens if you’re on a vacation and you need cash? It’s better to have it and not need it than need it and not have it.
In order to figure out what your potential bank’s ATM situation looks like, you will need to visit each of these bank’s websites. Once there, you need to find their locations button, like this one at First Federal Bank of Kansas City, or you can use their search function and type either Location or ATM. When looking through their list, the biggest thing to remember is the more the merrier. If they don’t have many ATM’s in their “network”, then you will more than likely have to pay a fee in order to get your cash out. That’s not ideal.
Go through your list and figure out what each bank’s ATM network looks like. Who knows, one of the lower banks on your list may end up having the best ATM network.
More money. Interesting.
Physical bank or online bank. Check. ATM locations. Check.
Now, it’s time to talk about where you will be putting your money and oh boy, this can be a tough thing to narrow down!
The first thing you need to consider is what kind of checking account do you want? Do you want one that is free with little to no requirements or do you want a checking account that can earn some extra interest but may have more requirements in order not to be penalized?
When it comes to free checking accounts the best thing to search for is, you guessed it, free checking. Get on the websites for the banks that are still on your list and see what comes up when you search for free checking. The things to keep an eye out when you’re looking at their product pages (it’ll look something like this) are these:
- Now for a bank to technically promote a "free" checking account, there shouldn't be any maintenance fees but make sure to double check it just so you're not caught off guard.
- Is there a minimum amount of money required to open the account?
- Is there a minimum amount to have in the account?
- Any benefits for doing certain things?
If you’re looking for a checking account that is simple and you don’t need to think about it, then Free Checking is the way you want to go.
The other option you could choose is a Premier Interest Checking Account. Other banks may have different names for this type of account but the important thing to search for is Interest Checking. When comparing bank accounts, be sure to check these things:
- Are there maintenance fees? If so, how much? Are there ways to avoid it?
- Is there a minimum amount of money required to open the account?
- Is there a minimum amount to have in the account?
- How much is the interest?
This kind of checking account is great if you want your money to grow a little bit while it’s sitting in the account. A note for you to consider though, the interest in this account will more than likely be lower than a savings account, so if you would rather not have to worry about keeping a certain amount in your checking account to avoid penalties, maybe it’s not the right choice for you.
Reward for a job well done
It’s typical for rewards to be a credit card thing but some banks offer rewards in their checking accounts. Some rewards to check for are:
- Earn higher interest
- Cash back
- Other rewards
Earn Higher Interest
Some checking accounts will offer higher interest rates, Annual Percentage Yield (APY) but more than likely, you’ll have to put more effort to get it. You may have to set up direct deposit, have a certain number of debit card transactions per month, spend a certain amount of money, or set up bill pay.
A thing to note is some banks limit how much interest you can earn by setting a maximum balance. This could mean you get that higher interest rate but only on a certain amount of money. If you have more than that, sorry, you only get the interest rate on their approved maximum balance.
Cash Back
Similar to cash back for a credit card, you can earn cash back for using your debit card. Some banks' cash back may be smaller and others might have bigger cash back rewards on certain purchases. Take time to look through these accounts to see if the purchases you normally make would maximize your rewards.
Other Rewards
Besides cash back and higher interest rates, some banks may give you other rewards with their accounts. Other rewards could be cash bonuses, airline miles, investing options, etc. Another thing some places could offer is sweepstakes or giveaways. Again, look through the accounts and see if the benefits line up with what you want from your money.
Summary
Well you made it this far, give yourself a gold star, I hope you learned something through this avalanche of information I just threw at you. The key takeaways from all this when you’re moving into a new bank and selecting a checking account is this.
- Define what kind of bank is most important to you.
Do you want a bank that has a location near you in case you need to go in and talk to somebody or would you rather have an online/mobile only bank? This is the most important first step so make sure to choose what you want.
- Does your bank have a good ATM network
I know the world has very much moved to mostly cashless but for those moments when you need cash on a vacation, at a festival or whatever, it’s good to have that security knowing you can use ATMs and not have to pay a fee. The bigger the network, the more ATMs you can use.
- Free vs Interest
Do you want a checking account that is very low maintenance and little to no requirements or would you rather have your money grow while it sits in the checking account but it may require more effort from you to avoid fees and other penalties? Answer this question and you’ll know exactly what kind of account to look for at your new bank.
- Rewards
Some accounts offer rewards whether it’s higher interest, cash back or other types of rewards. Look through the rewards the account offers and see if they line up with what you’re spending your money on.
Changing banks can be a tedious task especially if it’s your first time doing it but by figuring out your answers to these four topics will help make the selection process easier and more beneficial to you. Plus, opening a new account is streamlined now that it takes around five minutes to complete.
Don’t let your money sit in your parent’s bank because that’s where it’s always been. In the end, you may find out that it’s not the best thing for you, your money or your future.
If you haven’t already, watch the video on this topic then subscribe to our YouTube channel. You can find lots of great tips for navigating your finances and you might learn a thing or two along the way. You may even end up with a little extra cash in your pocket thanks to what you learn. Give it a try, there is nothing to lose. As always, thank you for trusting us.
