Choosing the right bank for you could be tricky. This is especially, when it is your first time having a bank account. If not done right, you could be left in debt just for having an account with a bank. Even when you have not borrowed money from the bank!
Yes- there are some banks out there who charge you for having an account with them. As working class adults, I think it is utterly ridiculous to pay to save money with a bank. This is because having an account with a bank, is doing a favor to a bank.
What do I mean by this, my good reader?
When a bank has your money, it lends it out to other customers and charges an interest on it. While banks’ loans generate interest in single or double digits on your money, you only get an average of 0.45% on it. Basically, you are doing a bank favor so there is no need to pay to maintain account.
Hence, the importance of choosing a bank which has your best interest at heart. By best interest here, I refer to opening a bank account with a bank which will not inconvenient your life. Having said that, here are things to consider when choosing a bank.
The Most Three Most Important Things To Look For In A Bank
The following below are what to value the most, when choosing a bank as a young working class adult trying to survive in this economy.
1. No Monthly Maintenance Fees On Bank Account
How much does it cost to maintain a bank account?
The average monthly fee for a checking account ranges from $5 to $30. Some banks charge you a monthly maintenance fee to have an account with them. As the working class adults we are, I do not recommend opening a bank account with any bank which charges a service fee to have an open with them.
This is because it is an unnecessary expense, which accumulates at the end of a year. For example: $30 monthly accumulates to $360 a year. It may not sound much, but $360 in 10 years is $3600. When you think about it, that is a ridiculous amount to pay to a bank just to save money with them.
There are banks or credit unions out there, which do not charge to have an account with them. If you are a working class adult like me, your goal is to save money. Or even better, curb your unnecessary expenses. Am I right to assume this?
So, it would not help your financial goals to give out $5 to $30 monthly just to have a bank account. This is especially, when there are hundreds of financial institutions out there which will be happy to help you open a free bank account with them. Go for these banks, because these monthly maintenance fees are money you are not saving!
My guide, 4 types of bank accounts in the US, talks about the right kind of bank account for you at your current stage of life. Some of us are good at getting the wrong kind of bank account. The wrong kind of bank account could costs you a few hundred dollars to thousands a year just because you maintain it.
2. ATM Availability
When choosing a bank, why might ATM availability be valuable?
In the United States, we rarely pay with cash. Most people walk around with a debit card. When the need to pay with cash arises, you want a bank with ATM locations around your city. It is convenient to withdraw cash, when your bank has ATM locations around the city.
This is because you will not get charged a fee for trying to withdraw money from another bank’s ATM. If you have not withdrawn from ATM before, the service fee could be outrageous. You may get up to a $3.50 fee, when you withdraw from another bank’s ATM.
Again, getting charged up to $3.50 may not sound like a lot of money but you want the convenience of not doing that.
Hence, why I recommend selecting a bank with ATM locations around your city. Some banks offer to pay back ATM service fees on cash withdrawals on non-bank ATMs. Be sure to ask your potential bank about it.
3. No Minimum Balance Requirements
It is important to consider a bank which does not have a minimum balance to maintain an account. Why is this an important factor when selecting a bank?
There are some banks with policies to maintain a few hundred to thousands of dollars monthly in your account. Given our current economy right now, I will not recommend going for such banks. This is due to the possibility of a major life event which may affect your ability to maintain the required minimum balance.
Banks with a minimum balance policy may restrict access, penalize or close your account when you breach the policy. What then?
As a young American working class, I will recommend you to choose a bank with no minimum balance requirement in its accounts. It will save you the stress of having to keep a higher than the minimum balance monthly. This is especially, when you are still trying to achieve a semblance of financial stability in life.
4. Online Check Deposit
You want a bank, which lets you deposit a check online instantly. There are such banks out there. In today’s world, this feature makes life easy.
This is because you do not have to go queue in a bank location just to cash a check. Bank queues are one of the worst service lines to stand on. Do you agree, my good reader?
I am sorry, but I do not have the patience to wait for 20 minutes just to deposit a check. If you are like me, I will recommend banks with instant check deposit feature. Such a bank makes online check cashing and fund availability easy from the comforts of your environs.
5. Overdraft Protection
How much is the average overdraft fee?
The average overdraft fee charged by American banks is $35 per transaction. On the 12th of December 2024 though, Consumer Financial Protection Bureau1 announced some reforms which allow large banks to charge you a $5 overdraft rather than the hefty $35 per transaction next year. This includes an option of extending a courtesy to charge you just the cost the overdraft and nothing more. You can read more on the consumer bureau website I attached on this paragraph.
Anyways, the point is you want to go for a bank with an overdraft protection. What this means, is you will either not be allowed to overdraft your bank account or the bank lets you overdraft. This is as long as you are able to pay back the overdraft cost within certain period of time.
Personally, I would recommend just going for a bank which will not let you pay for things when you do not have money. A bank which does this for you, will help you overcome the temptation to overdraft your bank account to pay for purchases. You save money by not incurring unnecessary expense.
6. Interest Rates
In today’s world, there is no reason why we, the young working class, should save money with banks that offer us 0.46% in savings interest. Personally, I think it is a rip off. This is especially, where there are online banks nowadays giving out up to 5% in interest rates.
I kid you not.
These kinds of savings accounts are called high-yield savings accounts. Some of them need a minimum requirement to qualify for such an interest rate, while others do not care about minimum deposit. If these kinds of bank accounts are around, I want you to consider them before choosing a traditional savings account.
A while ago, I made a list of high interest savings accounts paying 3.5% in interest rates. I want you to check them up. If one of them meets your savings goal, you can go with it.
When you are looking for a bank account, I want your self-interest to come first. Yes my dear reader, it is your money and you are allowed to selfish with it. Never go for a bank account which does not have your best interest at heart.
On the whole, it is really about looking out for yourself as a working class American adult. As you can see, our financial systems are designed to screw the working class. Think of it this way: If opening a new bank will create an additional monthly expense for you, then it is not right for you. This is especially, when the cons outweighs the pros.
Reference:
- CFPB closes overdraft loophole to save Americans billions in fees | New Hampshire Banking Department. (n.d.-b). https://www.banking.nh.gov/news-and-media/cfpb-closes-overdraft-loophole-save-americans-billions-fees ↩︎
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