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.

Free Checking, Is It Really Free?

The easy answer is sometimes.

The question requires more research to answer honestly. You need to define what part of the checking account is actually free. While some free checking accounts are virtual scams others really do meet some definition of the word free and some are in fact close to the actual definition of free, if only for a period of time.

First, when looking for a free checking account you want to know what you are going to be using your checking account for and know before you go in. I utilize my basic shoppers approach to anything, “I don’t need it to launch the space shuttle, I need it to do… “Then I specifically outline what it is that I need it to do. Too often when we go to buy anything, be it a checking account or any other product we find ourselves seduced by all kinds of “goodies” that sound so good, but when we get past the excitement, we realize we’ve bought far more than we wanted or needed. This is why it is important to know what your basic needs for a checking account are and to research what options might add to your convenience, help you with your payment goals, organization, etc. Research these things and be honest with what you will use and what just “sounds” like it would be nice to have.

Some of the very basic options you will want to think about are ATM access, on-line banking, unlimited check writing, and on-line bill pay. There are plenty of other options that may also be offered but these are the most common I’ve encountered at the “free” level. This is where the differences in “free” checking accounts start to emerge.

There are some accounts, as I mentioned, list themselves as free and by the time you’ve read through all the fine print the only thing that is free is registering for the account. These are the accounts that I think are basically scams. It is one of the biggest reasons you have to be an educated consumer.

A second method that is common in free checking accounts, are those offer options free of fees in exchange for behaviors from you. Some of these include one or combinations of the following. They can include minimum balances, direct deposits of your paycheck, a combination of accounts with the bank (some require a minimum value from all accounts to account for your minimum balance instead of requiring a minimum balance in your checking alone), and direct deposits deducted monthly to your account from a check even if your check isn’t deposited with them. I’m sure you may encounter others but these are the most common I’ve encountered when researching where to put my money. When you account is no longer in compliance with the requirements, in my experience most often the balance requirements, the bank begins to charge the monthly fee associated with that account.

These are the accounts I’ve encountered most often in my banking life. However, another life lesson I’ve learned is once you find the account and you’ve had a wonderful relationship with it, don’t expect that it is a guarantee that your account will last forever. Banks can and do change accounts at will and they don’t always move you to the new “free” account most similar to your old account. Now if you get lazy as we have from time to time about your accounts you discover that you have acquired a monthly fee even though you’ve been rigorous about meeting the requirements of your checking balances, etc. What has most likely happened is your account has been changed and you missed it. You need to go to the bank and discover what your new options are. In our case the bank had moved us to an account with many bells and whistles we never would use and charged us for the functions we previously had for free. We came to discover oddly enough they had a “free” option that merely required direct deposit and no monthly balance requirements. We’d always had direct deposit with this bank. Don’t ever think they are going to give you the account that saves you the most money. That’s your job, to be ever vigilant about your money. I was only caught once more before this lesson became firmly learned.

Now when I’m at the bank or I’m looking at our accounts on-line I do check to see if the name of our account is still in existence. If I don’t see it, I ask because there is a good chance I’m not going to know I’ve been moved until the fees start hitting the account. I would advise others to do the same. Products do change frequently, and it is up to the consumer to keep up.

I recently did find a “free” checking account at our local savings bank. I read through the fine print and I can’t find anything after asking all my questions, reading on-line, and going back and asking more questions. I suspect this account has been established to attract people afraid of the larger bank collapses into the local bank. I further suspected this when after opening the account I received a coupon for cash back for opening the account. My thought is that after a certain number of people are invested in banking there, it will eventually resort to a traditional checking account. Depending on the requirements to avoid the fees we may or may not stay with it. I’ve never had a problem with bank shopping.

On a final note don’t be afraid to research your options. Make sure you know what you need for checking and that the account you get meets your needs. Sometimes you are offered the account that can launch the space shuttle and you really only need a basic account that you manage your basic household expenses and monthly bills. However, sometimes the free account really isn’t free if you are paying high ATM fees, per check fees, limited options for transferring money between accounts, etc. Sometimes you can meet the requirement for the account that isn’t marketed as free and get more options or seek out another bank that offers you what you need, and still keeps you on budget.