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.

So How Did You Get Here? Where do you Start?

The first place you start is with honesty with yourself and all parties involved in your financial life. Until you are honest about all the factors in your financial life you are going to struggle to come to terms with facing your financial life.

When I talk about honesty, people often think I’m discussing people who are hiding debts, lying about spending, hiding information from their spouses, etc. In fact that is the far end of the spectrum. Many of us find ourselves guilty of deceit through ignoring our finances. We know they are there and may even be tending to them with basic maintenance but deep down we know we aren’t giving them the full attention they need. This is what far more of us are guilty of and leads many of us into not having the financial health that we could have than the deeper issues of hiding spending, debts, and other dangerous financial habits.

So regardless of where you are in your financial life the first step to changing your financial path is to take an honest look at your financial habits. Even many of us who think we are doing well find out when we do a financial “audit” of our habits we find we haven’t been as honest with ourselves as we thought we were. I know since the beginning of the year my husband and I have started our own personal financial audit and while we always thought we were doing well, we’ve realized we can and should be doing better. None of our habits are leading us to danger but they aren’t leading us to financial wellness either. There have been some challenging moments as we faced our own emotions, habits, fears, and approaches to finances that had to be evaluated, tested, and worked to decide how we could improve the habits we have that work well and how to make new habits that can increase our financial well being while removing the less successful habits.

Anyone who wants to tell you this is easy or painless is selling you something. It isn’t easy or painless. Whether you are financially challenged or just trying to make your finances work better for you, changing the way you’ve done things deals with far more than money. It reaches into all levels of your life and how you address those changes can determine how successful and long lasting those changes are going to be.

Just about every financial guru will tell you the first thing you have to start with when going down this road is finding out where your money is going. I started years ago on paper and moved to spreadsheets when I got computerized because I loved the way I could immediately see the way changing numbers changed my budget. If I saved X number of dollars in Y column it gave me more money to spend on Z. The immediate feedback works for me. It was something we’d gotten out of the habit of doing because we always had enough money to pay the bills and deposit money into the savings. When we got serious about budgeting the spreadsheet has returned and become a great communication tool for us to share in clear terms how much money we have in income and clear and precise deductions for all the money we spend in each pay period. I’ve taken to creating a spreadsheet for each pay period and dividing the expenses per pay period because this is the most effective method for us. I found trying to do it all on one sheet got confusing trying to figure out which bills were due when. Others do fine with one sheet. I’ve seen students who do one sheet for the whole semester since the vast majority of bills hit at the beginning of the semester and the “living” expenses are basically one line item for the semester budget based on how much is left for that category. It is a matter of what is most efficient and productive and honestly, what is working. If it isn’t effective, you need to rework it to make it work for you.

Once you’ve written down what you make and everything you owe, now comes that gut wrenching honesty part, do you make more than you owe? This is why many people avoid budgeting. They just don’t want to know. They avoid the truth at all costs. That is one of the things I really do love about spreadsheets. It lays it all out for you. If you set up the formula it will subtract the income from your debts and let you know exactly how you are doing on that budget. We’ve had the unexpected months where we did better on certain bills than we expected and been under budget and we always love those. We’ve also been over budget with unexpected emergency costs and that is ultimately why we do have emergency funds saved so we can pay for those costs. In the beginning we also had months where we realized we just were spending too much and needed to cut back in certain areas if we wanted the option to splurge in others. Having all the expenses laid out made those choices harder to ignore. In the past it has been easier to not be honest with ourselves and decide we’d deal with those problems later while we enjoyed ourselves now. Now we are trying harder to acknowledge the cost needs to be paid now, not later. It doesn’t mean we can’t do it; we just have to be honest about how we will pay for it. If that means we are going to dip into savings, then we acknowledge it upfront, not when the bill comes in.

Once you reach the point of honesty about your financial situation you are in a far better place to move forward with addressing where to go next.