Once you have decided what type of bank meets your needs best, you have to choose what account to open. Here are some tips to avoid mistakes.
1- Set a goal
The reason you have for opening an account will determine the type of bank account you should open. You won’t choose the same type of account if you want to park your cash for a long or short time. What you plan to do with your income is the main decisión factor, so your first step must be deciding how you want to spend and save your money.
2- Choose the right account type
Pick a bank account that adjusts to your goal. For example, you might choose a checking account for everyday banking, including depositing your paycheck, withdrawing cash and paying bills or a savings account if you want a safe place to store your money and be able to access funds quickly. You'll need a money market account for your emergency fund (for they hold cash that you won’t need right away), or a certificate of deposit (CD) for your long-term needs.
3- Look out for the fees
Fee schedules vary by account type. Check out monthly maintenance fees, early withdrawal penalties for CDs, overdraft fees or out of network ATM fees, for example, to determine if you can afford the account you want to open. Some free accounts, with no monthly fees, still exist, and it may be worth taking the time to find one.
4- Consider the minimum balance requirements
Balance requirements also vary from one account to another so analyzing them is important. You might be better off opening a free bank account if your usual average balance is low or middle-of-the-road, to avoid paying maintenance fees if you choose an account with a balance requirement that overextends you financially
5- Check the transaction limits
Savings and money market accounts limit your withdrawals or transfers in a month. Checking accounts aren't as restrictive, but may only allow you to make debit card purchases and ATM withdrawals of up to a certain dollar limit each day. These limits must be taken into account too.
However, in any account you open, the basic thing you will be seeking is low costs and high rates. This is why it is important to read carefully the terms and conditions of your contract to not encounter surprises further on. It only takes a few minutes to open an account online or at a branch and you don’t need to keep all accounts under the same roof. So look into all the options and mix and match to fit your needs.