December 11, 2009, Newsletter Issue #109: Choose a Bank That is Right For You

Tip of the Week

Unfortunately, most people don't give much thought to selecting a bank. There is more to selecting a bank than just "free checking". Your bank is at the center of your financial development. There are several things to consider when choosing a bank including cost, convenience, and an auto bill pay option.

Make no mistake about it, banks are in the business of making money also. The easiest way to do this is by charging its customers fees. Some banks charge a flat monthly fee, some charge a fee for every check that you write, you may get charged if you walk into the bank and speak with a teller, while some banks even charge you for calling and speaking to a customer service representative (at least the call is toll free) With all of these potential charges, its difficult to keep the money that you do have in the bank.

Credit Unions are also a great alternative to traditional banking institution. Credit unions are nonprofit organizations and unlike banks, which are owned by investors, credit unions are owned and controlled by the customers. Credit Unions return the favor by offering its members low interest rates on loans, and greater returns on investment products.

Online Banks are another alternative to traditional banking institutions. They have been gaining popularity as of late due in large part to the attractive APR that most offer due to the low overhead. For example, a money market account at a traditional bank could you a 1.5% return, but a similar money market account could get you 3.04% return on your investment. As with other banks, there are some drawbacks to the Internet banks. One of those drawbacks, is making deposits. If you have direct deposit, then this will not affect you as much. If you need to make deposit, you will need to send in your deposit or use an ATM that accepts deposits for your bank.

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