Financial Highway

Posted: 08 Mar 2012 04:00 AM PST

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Now that you're done with piggy banks and secret drawer compartments, and you're ready for passbooks and ATM (automated teller machine) cards, it's time to choose a bank to entrust your savings [find the best savings account for you] and investments [find the best brokerage for you] to.

While it's true that choosing a bank can be quite easy with some common sense and a good deal of research, choosing the bank that's best for you requires more work and careful discernment. For one, banks offer different products and rates; thus, picking the one that best suits your needs doesn't just mean going for the biggest one or settling for the nearest.

There are several factors that you have to consider in deciding a suitable bank for your assets. Here are five of the most fundamental:

1. Legitimacy and Credibility

Needless to say, this is the first and most important thing to consider in picking a bank. You wouldn't want to put all your savings into a bogus institution and end up losing all your assets to some awful charity. You also wouldn't want to invest or deposit your money into a weak bank that's off to go broke in a few months without getting robbed.

What you need is a stable, trusted and legitimate financial institution that can very well take care of your hard-earned money and interests.

One of the safest ways is to go for a big name bank. But if for any reason, you have to or prefer to go for a smaller institution, check out if it is a member of the Federal Deposit Insurance Corporation (FDIC) (CDIC in Canada). This entitles you and your money to the protection offered by the institution to build trust to the financial system. Check out the FDIC's/CDIC’s website and look for the bank's name through its bank find tool. Search the web for reviews or testimonials from the bank's current and former clients.

2. Location and Accessibility

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Consider the convenience. Make sure that the bank you choose has enough branches or ATMs to make it easier for you to access your money wherever you go, especially if you intend to travel. Check if the bank's partnership with other institutions allows clients to access their money through ATMs worldwide.

It is also advisable to pick a bank that has a branch near your residence, school or place of work. This will make it easier for you to make regular deposits or withdrawals.

If possible, go for a bank that makes full use of recent technologies for better services. Some banks have trusty online or mobile banking mechanisms to allow their clients to manage their money virtually anytime and anywhere.

3. Intended Use

Since banks have different features, make a list of your priorities and see which banks offer the best compromise.

Are you planning to open a savings deposit account, time deposit account, checking account, or credit card?
Do you intend to invest, apply for a loan or get an insurance?
Are you looking for a bank that is most widely accessible anywhere around the country or around the world?
Do you want to be able to transfer funds or pay your bills online or through your mobile phone?
Do you wish to be able to bank even on a weekend?
Are you one to transact with huge amounts of cash or you just intend to deal with smaller balances?
Will you be using your account for payroll?
Do you plan to automate regular bills payment and money transfers such that you wouldn't have to worry about them every month, quarter or year?

4. Fees and Rates
As mentioned earlier, banks offer different costs, fees and interest rates. While still regulated by the FDIC/CDIC, banks are free to tweak their rates within the allowable limit. Thus, it is advisable to pick a bank with charges that you can afford.

If, for example, you intend to open a checking account, see the bank's fees and billing schedule, even and especially if the bank offers free checking. If you intend to apply for a credit card, choose a bank with lower rates and promos for rebates or rewards. If your primary purpose is to save, pick a bank that has higher deposit interest rates or graduated rates depending on the amount of savings.

Also, select a bank that is transparent in its rates, showing exactly how fees, interests and other costs are computed.

5. Customer Service and Transparency

Since you will be entrusting your money to them, it is important to pick a bank that has good customer service. The bank's client support and customer service must be (1) easily accessible any time, (2) accommodating and (3) reliable enough to always offer fast and suitable solutions to your inquiries and concerns. You can try the bank's customer service just to see how prompt or informative its responses are.

There have been a number of reported instances wherein bank clients have had their finances ruined because of choosing the wrong bank. Some were bombarded with sudden hefty fees, others got caught up in bank bankruptcy, while others are having a hard time inquiring about their accounts due to unacceptable customer service. To avoid these, make sure you choose the bank that best suits your needs and protects your assets and financial interests.

Johann Carpio is a marketing consultant for Purechecks.com, a company you can look up when ordering checks online. In his free time, he is working on plugging the holes in the Unified Field Theory and how to make money out of it.

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Thursday, March 8, 2012