There’s a bank out there for everyone. From low frills accounts to sophisticated systems that let you control your finances all in one place. Which type of bank is right for you depends on how you plan to use it.
Do you see a bank simply as a means to an end? Or would you prefer yours to help support you during your financial journey? The bank you choose should give you the convenience to live a better life today, while helping you secure your financial future.
Here are six things you should consider when choosing a bank.
1. Consider the bigger picture
You may be lured by a super-low mortgage rate or a high interest savings account. But will that be enough on its own?
Sometimes low cost accounts come with so many restrictions that they’re not as helpful as you expected. Some banks make their best rates dependent on having a minimum deposit each month, a minimum balance or even a minimum (or maximum) number of transactions. Others pay interest only on your deposit and not compound interest, meaning you’re not really receiving the headline rate, at all.
2. Look at the fees...
We don’t have to tell you that bank accounts often come with fees. But how much you’ll pay and when you’ll pay it often depends on how you use your account and even how much money you have. Common transaction account fees include:
- monthly account keeping fees
- ATM fees, especially for using another bank’s ATM
- international transaction fees
- internet banking fees
- branch fees.
Say your bank charges you $2.50 every time you use another bank’s ATM. If you do that once a week, you’d be paying more than $10 a month on ATM fees alone. If you add a $5 monthly account keeping fees plus a charge every time you send money overseas (and perhaps you do this once a month too) the fees quickly add up.
Work out what you’re likely to be up for in fees based on your current lifestyle so that you can really compare banks.
3. Make sure your bank is investing in its tools
A sophisticated digital banking system can do so much more than just show you your recent transactions or let you pay your bills online. It can help you actively manage your finances so that you always stay one step ahead. For instance, does your bank:
- give you the overall picture of your finances, including investments, loans, property value as well as your day-to-day banking?
- help you control your cash flow by showing your spending in real time?
- search your transaction history the way you speak - for instance, 'how much did I spend on eating out in January' or '#taxtime' rather than having to trawl through statements?
- pinpoint on a map exactly where you spent money?
- automatically categorise your spending using easy to read charts?
- allow fingerprint log in on its mobile app or let you put your card on hold, without any fuss?
- let you easily attach receipts to any transaction to help you with warranties on your purchases or at tax time?
Make sure your bank has the flexibility to work with you whenever you need to make a major investment or purchasing decision.
4. Consider your financial goals
What’s on the horizon for you over the next five to 10 years? Is it marriage? Kids? Travel? A bigger home? An investment property or share portfolio? Starting a business and abandoning the 9 to 5? And what is your bank doing to help you make sure you stay on track and have the finances to afford them?
For instance, does it let you set monthly spending limits for your categories – clothes, eating out etc?
And does it let you see your whole financial picture in one place - not just the value of any shares or super - but also the equity you have in your home, so that you always know where you stand, what you’re likely to be able to borrow and what your next financial move should be?
5. Do a cost-benefit analysis of perks
If you’re interested in the rewards or benefits that banks can offer, make sure they tie in with your current lifestyle, deliver a benefit you actually want, and don’t cost the earth. Don’t change your spending patterns or shop at particular stores just to take advantage of them.
6. Think responsiveness
When you’re building your wealth or just living your life, there are likely to be times you’ll need to act fast. And you want to make sure your bank will act fast too.
It could be that you need to beat other prospective purchasers putting a deposit down on your next home; or you have a limited time to take advantage of an investment opportunity. Whatever it is, the last thing you need is transaction limits getting in the way or bank procedures delaying you from moving your money.
So make sure your bank has the flexibility to work with you whenever you need to make a major investment or purchasing decision. If you’re not sure, call them and ask them directly about their protocols and procedures.