Even as our world gets more digital, banks play a key role in our ability to manage our money. Whether you're completely new to banking, moving to a new town, or simply not satisfied with your current bank, these eight questions will help you make the right choices about your money.
1. Is there a monthly fee, and if so, how can I avoid it?
Many banks charge monthly fees for their basic checking and/or savings accounts. Those fees are often easily avoided, however, by qualifying for one of the bank's exceptions. For instance, Bank of America (NYSE:BAC) charges $12 per month for its "core checking" account. You can avoid that fee, however, if you're a student, have at least $250 per month direct-deposited into the account, or maintain a minimum $1,500 daily balance in it.
2. Which ATMs can I use for free?
Most banks allow you to use their own ATMs at no cost, but your bank may not always be the most convenient way to access cash when you need it. Using an out-of-network ATM could cost you fees from your bank as well as from the ATM owner and/or network.
Some banks, however, belong to networks that allow you to access all ATMs within the network for free. Fifth Third Bank (NASDAQ:FITB), for instance, belongs to the Allpoint network and allows its customers to access all Allpoint ATMs in the U.S. at no charge.
3. Is there a cost to pay bills online?
Your account may be known as a checking account, but with online bill-pay services, you may never have to actually write a paper check. Many banks offer absolutely free online bill-payment services, but a few have fees attached. JPMorgan Chase (NYSE:JPM) charges $5 per month, for instance, for online bill-pay for customers who use its "Chase Customized Checking" accounts.
That said, many banks do charge fees for online payments if you want expedited processing, so be sure to set up your bill-payment schedule to allow enough time between paychecks and due dates to avoid those costs.
4. Can I make mobile deposits for free?
Your bank likely has a mobile app that lets you deposit checks from your phone. Most banks offer that service for free, but some may charge for the convenience. Still others offer mobile deposits for free but put a hold on the money for several days, though the bank might then offer you access to a given deposit faster for a fee.
5. What interest rate will I earn?
Most banks offer some interest on their savings accounts, though the current national average is around 0.09%, according to Bankrate.com. On checking accounts, if interest is available, rates are frequently lower than savings accounts, and you need a larger balance to qualify for the best rates. Bank of America, for instance, currently advertises 0.01% interest on balances less than $50,000 in its interest checking account, though that does step up to 0.02% on balances above that amount.
6. What happens if I spend more than I have in the account?
If you overdraw your account, your bank may deny the withdrawal and charge you fees, and those fees may very well hit on every attempted overdraft. Many banks will allow you to link your checking and savings accounts so that there's an automatic transfer if one account is overdrawn, though those automated transfers may come with a fee, too.
If your bank also allows you to link a credit card to your account to avoid overdraft fees, be cautious. In addition to whatever "activation" fee the bank charges for using the overdraft service, the draw from your credit card will likely be considered a cash advance on that credit card. That will subject you to your credit card's cash-advance charges and interest rates, which are typically higher than you pay when using it to make purchases.
7. How can I get help if something goes wrong?
Your bank may have nearby branches that you can walk into to ask for help. If you have an internet-only bank or use a bank from out of town, you'll be reliant on phone, webchat, or email to resolve any problems that may arise.
It can be scary -- and expensive -- to see unauthorized withdrawals from your account, or to see a deposit not clear your bank in time to cover scheduled withdrawals. Knowing in advance how your bank will work with you in the event problems arise can help you come to a resolution that much more quickly, making you more confident in your choice of banks.
8. What's in it for me?
In addition to interest on your accounts, many banks offer rewards programs for things like using your debit card to make purchases, or having a credit card as well as deposit accounts with the bank. Bank of America lets you select from a menu of available rewards for using your debit card, and Discover (NYSE:DFS) Bank will pay you $0.10 for each of the first 100 check, debit-card, or online bill-pay transactions you have in a month.
When you open and fund a deposit account, it's your money in the bank. The better that the overall package the bank offers can meet your needs, the happier you will be entrusting your hard-earned cash to that institution.