How to Evaluate Your Next Bank
Tue, Dec 8, 2009
A recent article in Money magazine, “If They Built The Perfect Bank”, discusses 5 characteristics of what you might love about the perfect bank.
The article mentions banks need our business more than ever right now, but they are continuing to push people away because of high fees and poor service.
As with most products, I think it just goes back to having good customer service and a quality product to be competitive. If one of these is missing it makes it difficult to become a long-term or repeat customer.
Unfortunately, there are a lot of banks out there that don’t get it. The article pointed out that just 35% of people are committed to their bank, according to a recent J.D. Power & Associates study. Given 65% of people are potentially open to a change; I thought it might be good to highlight the ideal characteristics that might be used as criteria for evaluating another financial institution.
Ideal characteristics to evaluate your new bank
Money management tools
Tools may include the ability to easily transfer funds between accounts, or ways to look at all of your accounts at a glance.
Easier ways to manage saving
A key to saving is prioritized saving. Once you have your list of savings needs with your emergency fund first, you should be able to separate funds for such things as car savings, or other upcoming needs.
Deliver good customer service
No matter the tools and resources available on the web, people are still going to eventually want to speak to someone with questions or problems. The better banks will retain some mode of customer service contact for their customers and make this service readily available for them.
On the go or mobile capabilities
The trend in software is to provide mobile versions. With devices such as the iPhone, people are able to get access to information much easier. Banks and other financial institutions should start offering customers secure ways to access their information when on the go.
Realistic about fees
Finally, no one likes paying fees, especially, if they are ridiculous overdraft fees and ATM fees. Some banks provide the ability to link checking accounts to brokerage accounts or credit to use for overdrafts. Of course, good money management will prevent this from occurring, but people do make mistakes from time to time and a sky high overdraft fee and a few overdrafts can add up to over $100 fast.
Additional characteristics to evaluate your next bank
ATMs
One characteristic not mentioned, but I think is important is the ability to access your money via ATM when needed. I don’t think ATMs are absolutely necessary, but it does add one more layer of convenience.
Interest rate
Another characteristic not mentioned, I think is on everyone’s minds is the interest rate or yield on savings accounts. I think this one should be added to the list and considered as different banks are evaluated. While some banks may be known for their checking services, they may not do as well with the yield on their savings accounts.
ING Direct “gets it”
Interestingly, ING Direct was mentioned a few times in the article as a bank that “gets it.” ING is an online institution I’ve recommended here at One Money Design. You can read my review of the Orange Savings account here.
Noted was ING’s ability to create sub accounts or buckets for managing money. They also have a reasonable policy for overdrafts by allowing the link up with a line of credit at what is a lower rate than most credit.
What are the ideal characteristics for you when it comes to evaluating a new bank?
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Always good to see a local, I have been thinking about changing bank accounts, but had never been serious til I saw the 4% on a checking account, I’ve had my account with chase for 6 years and never had any interest, I only kept it because I liked the people where I lived, now that I’ve moved the people aren’t there and there is nothing promoting my desire to stay other than I’ve already got it set up, but that’s not much, great blog
Clayton
Clayton´s last blog ..Let’s buy a house
Clayton, I agree that higher interest rates are a good reason to consider making the change. Good customer service is also important to consider. It sounds like you had developed some good relationships at your current bank. Personally, I’m usually okay as long as the bank has good phone customer service, if I ever need it.
In my view there is no place on earth where your money is safe.
Thanks to the mortgage debacle and other forms of “greed”, our banks are no longer stable, if they ever were in the first place.
Do not store up for yourselves treasures on earth, where moth and rust destroy, and where thieves break in and steal. But store up for yourselves treasures in heaven, where moth and rust do not destroy, and where thieves do not break in and steal
- Matthew 6:19-20
Arthur, I can understand your concerns. I recently wrote a post on saving: http://onemoneydesign.com/blog/2009/12/06/the-wise-man-saves-for-the-future/
I do think it is wise to save for the future, but the right balance of saving and spending need to be found which I dicuss in the article.
Been really considering switching banks for a good while now. This is exactly the kind of advice I need. Thank you!
DJ´s last blog ..Great Resources for Energy Savings
DJ, happy to help. Check out my post tomorrow which is going to be about how to switch to a new account.