Opening your first bank account can be confusing. Many start when they’re young… but others don’t jump on the bandwagon until they hit adulthood. I even know one woman who has never had a bank account in her life. She’s 53.
Before you even walk into your local branch, phone up telephone banking or log onto any bank’s website, you need to consider your first point.
1) Purpose. You need to decide whether you want a savings or transaction (also called ‘everyday’) account.
Savings accounts
-Relatively high interest
-Penalties for withdrawing money
-Usually have lower monthly fees
-Usually require a high amount of cash to gain good interest
Transaction accounts
-Low or no interest
-No penalties (or small fees) for withdrawing money
-Higher monthly fees
Once you’ve got info from one bank, don’t even think about applying yet. As strange as it seems, you have to ‘shop around’ when you’re opening bank accounts. Make sure you compare a range of different banks. Some points you will need to consider when choosing a bank is:
2) Accessibility. There is no point in opening a bank account with a bank that’s 30 min drive from you.
3) Security. The bank needs to be secure. If you’re using internet banking, make sure the bank has implemented extra security measures (RaboPlus Australia has a small device called a Digipass which is required every time you log in).
4) Sustainability and reputation. Don’t sign up for a bank that doesn’t have a good reputation or one that could go under at any time.
Now, consider drawing up each bank’s features (for their best accounts on offer) in an Excel spreadsheet, or hand-draw a spreadsheet. Then consider these points:
5) The biggest concern would be bank fees. An interest rate of 6% won’t help you if there’s a ridiculously high fee on the account. Also search for hidden fees. Here is some information on hidden fees:
In 1995 a cash advance to a bank account cost a maximum of $10 (it was usually about $4). In 2005, the worst offender (HSBC) charged $15 + 3% of the cash ‘advanced’, with no maximums.
Stop-payments cost a maximum of $10 in 1995. $32 is Sun Trust’s current fee. It costs almost $10 in some banks to get a duplicate statement sent to you.
6) Look at the interest, but don’t get a high-interest account with high fees. It doesn’t work.
Remember, if you’re ever in financial strife, talk to your bank manager or an accountant. They’re professionals and they can help!