Features your Next Bank Account Needs
What to look for before you open an account
If you’re going to open a new bank account, choose wisely. Switching accounts is a pain, and living with an ill-fitting account can be a drain on your time and your account balance. Banking services are very similar from bank to bank, so focusing on a few key features might be all you need to get set up for success.
One of the most important features of your next bank account should be an affordable fee structure – preferably without any fees at all. Bank charges easily blow through any interest you earn in your account, and automatic monthly maintenance fees put you in catch-up mode before you’ve even had a chance to use your account.
Free checking is not dead. Finding a fee-free account is especially easy if you’re open to online banking, but you should be able to find free checking at brick-and-mortar institutions in most areas as well. Credit unions, in particular, are often a good choice for free checking, and small local banks are also worth checking out.
If you can’t find a completely free account, qualifying for free service is the next best thing. Most banks and credit unions that charge maintenance fees also offer ways to dodge those fees: if you meet certain criteria, the fee will be waived. For example, if you set up direct deposit with your employer or keep a certain amount in your account, you’ll avoid monthly maintenance fees.
Options for Overdraft and Insufficient Funds
Some fees automatically come with your account, and others are the result of transactions in your account. Overdraft protection is an optional service that you can add to your account, but that’s probably a bad idea if you’re actually going to use the service: banks often charge about $35 for the privilege of using your debit card to buy something when your checking account is empty.
That said, sometimes you’ll end up paying insufficient funds fees – even if you opted-out of overdraft protection (opting out only affects one-time debit card transactions). Those fees are just as bad as overdraft charges. If you’re paying them, it’s worth finding out if your bank has a more affordable solution. You might be able to set up a transfer from your savings account (which probably costs $10 or so) or an overdraft line of credit.
Every bank has a website that allows you to view your account balances and move money between accounts. Most banks also offer apps and mobile websites optimized for your phone or tablet (and those apps all do more or less the same thing). So what should you look for in your next bank’s app?
In the age of online banking, there are very few situations in which you need to physically go to a branch (which means dealing with traffic, lines, and banking hours). Depositing a check is one of those situations – you want to get the check in your account safely and quickly.
Fortunately, you can also deposit checks by sending a picture to your bank – no teller required. The service is generally free, and you might even be able to get deposits into your account after standard branch hours. Almost any mobile device with a camera will do the trick, but it’s a good idea to make sure your bank has an app for your device.
You might not get many checks, but when you do it’s nice not to have to visit a bank branch. Checks are still used for important (often large-dollar) transactions when your life is in transition: a new job, a new apartment, and so on. Mobile check deposit makes those transitions a lot easier.
As a runner-up – especially if you occasionally need to deposit cash – you might opt for a bank with numerous local ATMs that accept deposits.
Online Transfers and Bill Pay
Money is electronic. Make sure you can take advantage of that fact.
At a bare minimum, your bank should offer free online bill pay. You need the ability to schedule payments from anywhere, anytime (whether your bank prints and mails a check or sends the funds by ACH).
Another key feature is the ability to transfer funds to another bank account. You might keep accounts at several different banks, each serving a different purpose: one bank might pay a high APY on savings and another might offer a convenient ATM network. Physically moving cash around – or even working with checks – is cumbersome, and wire transfers are too expensive for everyday use. Pick a bank that allows bank-to-bank transfers so that you can move money with just a few clicks.
Want to send money to friends and family (to pay for your share of dinner, for example)? Some banks provide person-to-person (P2P) payment services as well. For the most part, these services are bank-specific, and they’re most useful when everybody involved uses the same bank. If everybody has a different bank, which is most often the case, there are usually better options.
Money isn’t always electronic. Whether you’re headed to a restaurant that doesn’t accept plastic or you’re buying used parts on Craigslist, sometimes old-fashioned cash is the only way to go.
Getting cash is as easy as visiting an ATM, and there is no shortage of those, but you’ll pay several fees if you use any ATM except your bank’s ATM. After your bank and the ATM operator ding you, those fees end up being relatively high in percentage terms.
If you go to the ATM more than a few times per year, find a way to minimize those fees. You can always use ATMs that are part of your bank’s network for free (or, if you use a credit union, there’s a good chance you can visit a different credit union’s ATM at no charge).
If using in-network ATMs is not an option, use a bank that reimburses your ATM fees. Numerous banks (online and brick-and-mortar) offer this feature. Be sure to read the fine print to find out about any limitations – there might be a maximum dollar limit each month, and certain types of ATM fees might not be covered.