Friday, June 5, 2009

Why Would You Want to Shop For A Bank?

In a society that will stop at Wal-Mart for one product and drive across town to Target to get a special deal on something else, this is a question that has long puzzled me. Why wouldn’t you shop for bank deals and potentially utilize banks for different products based on what they do best for the consumer?

The first issue many people cite is convenience and it is a fair one. When I grew up there were only a few banking options in our small town, none were in walking distance, and all offered fairly similar products to a teenager who didn’t have many assets to distribute. However, when I went away to college and started looking at my banking options I realized very quickly that not all banks specialize in the same banking options. You can get a great checking account from Bank A that meets your criteria for virtually free checking but their savings accounts are almost no better than the traditional piggy bank in terms of interest and many now have moved to fees if you don’t have balances that meet their criteria. Bank B had outrageous fees attached to their checking accounts but had a basic solid savings account that was similar to what I had at home with the interest rate I expected.

I have a general rule against paying the bank to let them hold my money in a savings account. While I did make that mistake once as I referenced in my article about checking, it has only become a stronger vow. If the bank is going to charge me a fee so they can hold on to my savings, I might as well reinstate Mr. Piggy to hold on to the cash. He only needs a reliable place to sit and collect dust while he holds on to my cash. Once purchased he doesn’t have monthly fees, so I’ve learned to watch how the account rules change very carefully regarding minimum balances, etc. The bank isn’t in the business of warning me about my mistakes.

That is why researching and shopping for our best options is a job you don’t want to abandon because it seems easier to ignore. You pay for not shopping around. For us there have been several reasons why different banks meet our needs. Each of the banks we use meets specific financial needs and offers products and services the others don’t. My husband has often wanted to combine the accounts and narrow down our loyalty to a specific institution or perhaps just a couple. However, when we sit down and discuss the specific purposes for each account we come to realize that the other banks don’t offer the same services we chose this bank to fulfill.

Now does it make sense to consolidate accounts to banks? Well we just expanded our business at one of the local savings banks for two reasons. One we are moving towards more debit purchases and fewer credit card purchases and needed an account that could accommodate that and by adding a checking account to our portfolio at that bank it gives us better options on our CD’s with the bank. When combining assets allows you to avoid fees, or in this case increasing your savings options, you have the resources to do so, then it is definitely worth considering. In our case we also wanted to have an account that was separate from our main checking account to assist with changing from credit to debit purchasing and limit access to that main account. The timing worked well for us. It is really something individuals have to decide as they work through their banking needs, whether the offers truly are worth spreading out their assets.

I’ve had bankers argue over spreading out the assets. Well I would never encourage someone to do something that their gut isn’t comfortable with doing. However, I’m not going to have a great checking account but keep my savings assets in an account earning .1% interest when I can get at a minimum .5% or up to 1.0% by making a choice to move to another bank. The rates get even better when you start CD shopping.

So, just as you wouldn’t hesitate to shop around for the best deal you can get on a retail product, don’t hesitate to bank shop. I didn’t address on-line banks because I’ve never used them. It’s something you’ll have to research and then decide what your comfort level is with them. I’m still a brick and mortar kind of banking customer.

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