How To Pick A Bank

There are a lot of bank options, so don't get overwhelmed.

My suggestion is to find a bank with lots of ATMs in your area, or at least with ATMs that are convenient for you to access. Generally, your bank will not charge you for using its own ATM (but check to make sure before opening your account), but using another bank's ATM can be costly. First, the owner of the ATM will likely charge you a fee, and your home bank may charge a fee as well. The safest way to keep fees down is to make transactions at your home bank's ATMs.

Hopefully, you will have several good candidate banks to consider, with ATMs and/or branch offices that are convenient for you. Stop by these banks and ask for literature about their basic checking account options. The banks will probably offer special deals (i.e. lower fees, more benefits, etc) if you can maintain a certain minimum balance. If you don't think that you can maintain the minimum balance, that's okay. Even if the best account that you can find has a $10 per month fee, that is still better than $500 or so per year that you may be paying in check cashing and money order fees.

One other thing to consider -- based on where you live or work, you may be eligible to join a credit union. Credit unions are a good altermative to banks, often with lower fees.

Start getting your financial life in order ... if you don't have a bank account, get one opened right away. Arrange to have your paycheck directly deposited in your account, and you will immediately realize the conveniences of banking. Having a bank account will also help you get your tax refund more quickly and more securely ... but more on that in a future entry.

Open a Bank Account

One of the biggest surprises around is how many people don't have bank accounts. I'm not sure exactly why people don't use banks. Perhaps some people don't trust them. Other people perhaps owe the government money, and fear that the money will be taken from their bank accounts.

However, the penalties for NOT having a bank account are huge. Going to one of those check-cashing stores to cash checks gets expensive with fees that they charge. Then, paying to get money orders everytime you need to send off a check gets expensive as well. I have seen estimates that people without bank accounts end up spending $500+ per year in check-cashing and money order fees.

Opening a checking account offers many advantages. Some of those include:

1) Reduced fees

2) Security. Cashing a check and carrying around a lot of cash is risky. You can deposit your paycheck, and just draw out the amount of cash that you need.

3) Convenience. You can arrange to have direct deposit of paychecks. If you miss work on a payday due to sickness, your paycheck makes it into your bank account anyway. The ability to write checks when it is convenient for you, rather than having to make it to the store to get a money order is a huge help. Also, most banks will give you a debit card which you can use to make purchases, etc.


Coming soon ... How to pick a bank.