Choosing a Bank

Being suspicious of “banking” is a time-honored tradition that dates back to the days of ancient Greece, when gold was horded in temples by lecherous, inbred priests (at least according to the movie 300). Sometime later, Adam Smith used his “invisible hand” to invent capitalism, or, as it’s now known, “eBay,” and banks resembling the ones we know today were born.

Things are pretty well regulated these days, but it is still good to bring a healthy amount of wariness to the process of choosing the right bank. Bear in mind that banks make up to 40% of their revenue from the fees they charge on consumer accounts. Like going to the movies, the “feature presentation” (i.e., an account) lures us in and then they turn the screws with overpriced concessions like Swedish Fish and Milk Duds (the banking equivalent of extraneous charges for things we only sort of want).

Getting kicked off the rents’ account sucks, as does cutting ties with the “Bank of West Hicksville” that gave out free Nalgenes during freshman-year orientation. But it’s time to move on. Like many things that are boring in life, choosing a personal banks seems like an arduous task, but a little research and effort can lead to a lot of saved time and money down the line.

Pick an Account, Any Account

Bank accounts are a dime a dozen, and when it comes to basic options most of the major players offer pretty similar terms. Still, you should familiarize yourself with the popular types of accounts before proceeding. It’s worth pointing out that the ability to write checks becomes a lot more important in post-college life when you’re paying rent and other bills, so make sure you will not have to pay extra fees to write the number of checks you need each month.

Basic Checking Account

• No minimum balance
• Can write checks
• Keep money safe but earn little or no interest

Negotiable Order of Withdrawal (NOW) Checking

• Earn interest as long as a minimum balance is maintained
• Can write checks
• Pay penalty fee for dipping below min. balance

Savings Account

• Earn higher interest (around 5%)
• No check writing
• More fees than basic checking account, including penalty for dipping below min. balance

Money-market Account

• Earn higher interest
• Must maintain higher minimum balance (sometimes $1000-$2500)
• Limited or no check writing

Visit Money Central to compare rates and find a checking, savings, and money market account in your area.

So What to Choose?

Here’s a basic guide for what to get depending on how much dough your stacking. However, be sure to assess your own habits and other places that you might put your extra funds.

Low-income

A free checking account with low monthly fees.

Moderate Income

Basic checking with savings account to earn some interest while maintaining the freedom of checking.

High Income

NOW checking with money market account.

Note that there are many other options besides the basic bank account. No matter what your income level, it might make sense to make your money work harder for you in an online checking or saving’s account, a CD, or a money market account. Check out our articles Understanding the Benefits of Investing and Discovering Investment Options.