One easy way to grow your money and investments is through your bank account, so it is important to choose the right type of bank for you.Verify my mortgage eligibility (May 28th, 2022)
There are three main types of banks to choose from: traditional, online, and credit unions. Depending on what products and services you need, each type of bank can offer different advantages. Below we will review the types of banks and accounts, some pros and cons for each, and tips for growing your investments through your bank.
Types of Banks:
Traditional banks provide products and services primarily through brick-and-mortar branches, and they often offer a wide range of products, services, and branch/ATM locations. These are great if you like banking in person. If you travel a lot, this type of bank gives you the easiest access to cash with the lowest fees. However, large banks with millions of customers have less incentive to offer the best products.Verify my mortgage eligibility (May 28th, 2022)
Online banks offer products like traditional banks but typically have no branches. However, their fees and interest rates are often lower because they do not have the expenses associated with physical branches. While online banks have telephone customer service, you likely won’t be able to walk into a branch for assistance. You can find some fee-free ATMs but usually only in/near larger city locations. Yet, online banks like Acorns Spend allow you to get access to a debit card that invests your spare change.
Credit unionsVerify my mortgage eligibility (May 28th, 2022)
Credit unions are nonprofit member-owned banks, so they offer a more community feel, know your name, and offer better customer service. Additionally, profits are returned to members, such as in the form of lower fees and rates on loans. Also, because of the community relationship, a credit union may be more flexible and willing to work with you versus a larger bank would. However, members must meet certain criteria, which is often based on where they live, work, or belonging to an organization, and credit unions may not offer the advanced features like larger banks or online banks offer.
In addition to choosing the right type of bank, you need to be mindful of the type of accounts they offer. Different accounts allow you to grow and invest your money differently.
Types of Accounts that can be Offered:
- Checking account – where you keep your cash, typically offer a debit card (some offer investment debit cards), give you the ability to write checks, have automatic deposit, and provide ability to transfer funds to other accounts
- Savings account – where many people keep their emergency fund, no need to worry as much about accessibility issues since you do not utilize it as much, but higher interest means more growth
- Money market account – more like a mix of a checking and savings account together, higher interest rate for growth, but gives ability to write checks
- Rewards checking account – provide you rewards to grow your money, but have specific requirements you must meet every month in order to earn a high interest rate, and rewards interest rate is usually limited to the first $25,000 deposited
Each of the above accounts offers you a way to grow and invest your money, so you just need to choose the right bank with the accounts you want. However, there is one more thing to consider when choosing the right type of bank; you should consider the products they offer.Verify my mortgage eligibility (May 28th, 2022)
There are typically two types of financial products available: loans and income generating assets. Some loans you might want to look into include: Car loan (new or used), Home mortgage loan, Home equity loan, and Credit cards. There are also asset growth products that might be important to you including: Individual retirement agreements (traditional IRA or Roth IRA) and brokerage accounts, Certificates of deposit, and Automatic investments. The right combination of products will allow you to grow and invest more money.
Overall, you’re looking for a bank that will provide you the right services, accounts, tools, and products that will allow you to grow your money and investments. In addition to examining the type of bank, accounts, and products offered, you should also consider the bank’s insurance, interest rates, fees, branches/atm locations, and balance requirements. Stay tuned for a post on that.Show me today's rate (May 28th, 2022)