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  • Writer's pictureGrant Allen

Choosing a Bank: What to Know

There comes a point in everyone’s lives when picking the “correct” bank is at the forefront of “adulting.” Although this article may be more or less for the new adult, Americans, on average, change banks two to three times per lifetime. In fact, the average U.S. adult keeps their primary checking account in the same bank for sixteen years, consecutively. This goes to show that over the course of a lifetime, your banking needs likely change, thus you’ll be more likely to change banks a few times. Admittedly, this article may be the most boring one I’ve written, however it’s a more important subject than you’d think and should be carefully considered.

So, without further ado, let’s dive into some of the most important aspects to consider when picking the right bank for you!

1. ATM Fees

If you’re regularly using your debit card, it’s important to look at the fees associated with (or lack of fees) when it comes to withdrawing cash. Although we are slowly-but-surely headed towards a less-cash world. I say less-cash because your pal from college may be saying that money will be completely digital, but let’s be honest… it’s not happening any time soon. With that said, ATM fees can play a big role in choosing your bank.

Specifically, the number of ATMs branded with your bank’s name on them—these will charge you less fees, by and large.

With the average American withdrawing cash 8-10 times per month and the average ATM fee being $3.08 dollars per withdrawal, and the average amount withdrawn is roughly $40 per withdrawal, you’re looking at roughly $24.64-$30.08 per month in ATM fees, or $295.68-$360.96 per year.

I always say the amount of money in any case is completely relative. However, I think we can all agree that that’s a fairly large amount of fees!

2. Security

No, not the security when you walk through the door. If that were the case, every bank has horrible front door security based off of all the bank robbing movies. Security, meaning, is there insurance on your bank. Moreover, the bank is FDIC (Federal Deposit Insurance Corporation) insured. This is a fairly straight forward thing—do they have it or not? If they don’t, I’d be hesitant to bank there.

3. Online Banking/Mobile Features

From online bill pay to transferring money from savings to checking or checking to savings, to direct deposit. Online and mobile banking features are incredibly important in a *mostly* digital world. Moreover, an app attached to your bank that has ease of use and reliability is super important. Fortunately, the vast majority of banks have these features as we gravitate towards a mostly digital world and many banks are adopting awesome features as well. Online and mobile banking features, for me, are really important. To the next person, it may not be as big of a deal. So, regardless of how important to you it is, I’d strongly consider what you want from a bank: one that is with the times or one that is without the times… Carry on.

4. Branch Availability

Having a branch of your bank nearby for deposits or applying for a loan, for instance, should certainly be considered. Additionally, this coincides with the ATM fees we discussed earlier—if you have your bank’s branded ATMs, you’re likely to not have to pay such steep fees on cash withdrawals. Nonetheless, it’s important to have your bank without driving distance, simply because a relationship with your bank is never a bad thing. Specifically, if you’re looking to apply for a mortgage or a loan of sorts, you’re more likely to get it and have a more lenient loan officer if you have a strong relationship with your bank.

5. Customer Service

Maybe it’s just me, but when it comes to customer service, I tend to gravitate towards working with a bank that I know versus one that I don’t know. This tends to be a debatable topic as it pertains to banking with a small bank versus banking with a massive bank. Bank ABC that is local against, for instance, Wells Fargo may be more attractive in this instance. However, there’s advantages to banking with massive banks like Wells Fargo for the features they may have that are superior to the more local and intimate Bank ABC.

In most cases, when you’re working with a smaller bank, your customer service is likely to be better and more importantly, not outsourced to a different country, like a Wells Fargo or Bank of America. Furthermore, you may be more likely to be accepted for loans with a small bank than a big bank, contrary to popular belief. However, you may have a higher interest rate on said loans because of the size of the local bank-- there is always tradeoffs to everything.

Wrap Up

Of course, you could go into the weeds on these particular topics with interest rates, minimum balance requirements, AUM (assets under management), availability, investment trends, etc. But in general, I wanted to give a high-level look at what to look for. Keep in mind as well that you don’t necessarily have to bank with one bank—you can, and most people do, have multiple bank accounts with multiple banks.

In my humble opinion, the most important aspects are customer service, fees, and online/mobile features. I’m also a big fan of not having to use the bank, which is something we teach at Lyvfin and help people rid themselves of the chains that banks can put on consumers. Nonetheless, do your due diligence and vet the banks you decide to do business with. At the end of the day, banks are a business. They make money off you, so make sure that your relationship with them isn’t all take, but some give and take as well.

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