When it comes to banking information the basics are very important. When you know how banks work you can make better decisions about your money.
The first decision you'll need to make is which bank to choose. There is a wide variety of financial institutions to pick from that range from small to large, traditional to internet-only and everything in between.
Before choosing a bank it’s important to make sure the one you pick is legitimate and that your money will be insured by the FDIC (Federal Deposit Insurance Corporation) or NCUA (National Credit Union Administration) if you choose a credit union.
Make Sure Your Bank Won't Let You Down
The best way to do this is to check out their website. Almost all financial institutions regardless of size will have a website that should display their official name, address of their headquarters and other banking information in an “About” section or other location on the site that’s easy to find.
Look for the FDIC logo along with “Member FDIC” or “FDIC Insured” as well. Credit unions should display the "NCUA" logo.
You can also check the FDIC’s online database to see if your bank is listed. This is a good source for banking information. It will ask you for the bank’s name, address, city, state and zip code. These are only for banks (not credit unions) within the United States so if you plan to bank outside the U.S. this will not apply. It’s important to note that some internet-only banks are based outside the U.S. and therefore are not FDIC insured.
If your bank or credit union fails and is not FDIC or NCUA insured, you lose your money. However, if it is insured, the FDIC or NCUA will reimburse the amount you lost up to $250,000.00 from your combined accounts in that financial institution.
Scam Alert! Be careful to ensure you type in the correct name of your bank in the browser. There are scam sites are out there that use names that are close to those of legitimate financial institutions in an attempt to collect your personal and banking information.
At this point, you can check with family or friends to find out where they bank and whether or not they are happy there. Or you can do your own research online.
Decide if you want to use an internet-only bank, a small community bank, a credit union or a large national or international bank. Keep in mind that even if you decide on a traditional style bank you will most likely still have the option to use internet banking. Almost all financial institutions offer internet banking now to stay competitive.
Choose several banks you’d like to find out more about. Once you make sure they are insured and legitimate, contact them and tell them you would like to open an account. Then ask about their interest rates, minimum balance required, fees, whether they offer debit cards, ATM fees and any other banking information you want to know. Keep in mind that you may be able to negotiate lower fees or lower minimum balance requirements.
Another thing to remember is banks like relationships. The more business you do with a particular bank and the more money you are able to deposit, the more leverage you have to negotiate. Sometimes if your mortgage or car is financed with a bank, they will waive fees or minimum balances on your other accounts. They want to keep your business and build the relationship.
When applying for new loans or mortgages, it's extremely important to shop around. Even if you currently have accounts at a particular bank you may find a better deal elsewhere. A few percentage points could make a huge difference in the amount you pay back over the life of your loan.
Also choosing the right type of loan can make all the difference. Here are several basic loan options.
There are more types but these are some of the most common. You can use these great loan calculators and mortgage payment calculators. They will help you get an idea of how much you can borrow and what your payments will be.
After you are familiar with this information, you'll be better able to work with your banker and determine which type of loan will work best for you.
Which Type of Account is Right for You?
There are lots of different types of accounts for you to choose from. And the great thing is you don’t have to pick just one. You can use several different types of accounts to fit your needs and make your life far more convenient. See how compound interest can grow your money with some of these accounts.
Some of the most popular accounts are:
Check out each one to see what they offer in terms of interest paid, flexibility and requirements. These details will vary widely from bank to bank so it’s important to check with several different banks before picking one.
Setting Up Your Accounts
Now that you’ve found the right bank, you can set up your accounts and start using them. Check with your bank and find out what information they will need to get your account set up. If you are opening a joint account with someone else, make sure they have their banking information as well. Also find out if there is a minimum amount required to open your account.
Talk with your banker and let them know your plans. Tell them what type of account you’d like to open but ask if they offer an account that would be better for you. They may suggest an alternative you haven't though about. Sometimes they will even offer package deals that can save you money.
You can get set up in their internet banking system at the same time you open your accounts. With internet banking you can transfer money between accounts from your computer and even pay bills online. If your employer offers direct deposit and you’re interested, have your banking information handy and talk with your personnel department to get set up. With these options you can really automate your finances.
Once your accounts are set up you can view your transactions and other banking information each month on your bank statement or online if you are set up with internet banking. This makes keeping track of your personal finance budget much easier.
If you don’t have a budget yet, head over to the “Create a Budget” section to find out how to get started.