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How to choose the right bank for your financial needs?

Photo courtesy Mireyaqh from Pixabay.

Whenever a person thinks of money for individual needs the first word that comes to mind is the bank. The banks have become completely ingrained in our modern lives and can be accessed both online and offline. Whether you want to earn money on your deposits, withdraw money from ATM, require a credit card, or loan the banks are there to fulfill most of the financial aspects. Therefore it becomes necessary that you choose the right bank for your financial needs.

During ancient times, there was a concept of banking, having begun in Babylonia and Assyria with the merchants offering grains as collateral. The lenders in the Greek and the Roman Empire accepted deposits and changed money. There is evidence of moneylending in ancient India and China also.

The relationship to the present era of banking can be traced to the Italian word ‘banca’ which means a table or the German word banc meaning ‘bench counter’. At that time the benches were used as desks or exchange counters by the bankers who used to make money transactions on desks covered by green tablecloths.

It is a very important decision in picking a bank that fits your needs as it makes it easier to handle the finances. Various banks offer different levels of services, charge fees accordingly and you may even decide to choose more than one bank according to your requirements. There are a few factors that you should consider before you choose a bank for your financial transactions-

1) Go for a National bank if you want convenience-

The national banks offer many benefits to their customers. They are available all over the country and have branches and ATMs at most of the places. If you are a customer of State Bank of India you can go and find its branches even in the remotest of villages which is a great convenience. They have apps for the convenience of service and offer many services which the smaller regional banks don’t. In case if you want better customer service then the regional bank would be a better choice where it is easier to build relationships with persons and they are less bureaucratic.

2) Type of account you want to open

Banks have many types of accounts and you can open the one that you require. The different types of accounts are-

a. Savings account-

It is a regular deposit account where you get to earn a minimum rate of interest. There are different types of saving accounts depending on the features of the product, type of depositor, and the purpose of holding the account. There are zero balance saving accounts and others with facilities like bill payments, debit cards, and features like an auto sweep. The number of transactions in a saving account in a month is capped.

b. Current account-

The current account is suitable for business owners, traders, and entrepreneurs who require very often to make and receive payments. These are zero interest-bearing accounts and you have to maintain a minimum balance to operate the account. There is no limit in the number of transactions in a day and these accounts allow an overdraft facility. A person can open a savings or a current account depending on their banking needs.

c. Fixed deposit account-

The fixed deposit account enables you to earn a fixed rate of interest where you keep the money locked in for a certain period of time till the FD matures and the rate varies depending on the tenure. Some banks offer premature withdrawal facilities from the FD but in that case, the rate of interest is lower.

d. Recurring deposit account-

In the recurring deposit account, you have to invest a fixed sum of money regularly i.e. every month or a quarter. In FD you make a lump sum deposit but in the recurring deposit account, you invest a smaller amount more frequently. The tenure and the amount to be invested can’t be changed and there is a penalty in case of premature withdrawal. The maturity period of recurring deposits can range from six months to 10 years.

e. NRI accounts-

These are accounts for Indians or people of Indian origin living overseas. There are two types of accounts a) Non-resident ordinary (NRO) savings or fixed deposit accounts b) Non-resident external (NRE) savings accounts or fixed deposit accounts. The banks also offer foreign currency non-resident fixed deposit accounts.

3. Compare the interest rates –

You can go online and check for the interest rates of the banks and apply where you feel the interest rate is reasonable for the savings bank account.

4. Search for a bank with low charges-

There is no need to open an account with a bank that charges lots of fees. Suppose you have accounts in two to three banks and they all charge monthly fees then it would add to lots of money. Check for the following things-

Issuance of Multi-city cheque book-

Once the customer opens a savings bank account he gets a cheque book with a fixed number of leaves free of cost. The cheque helps to pay a specific amount from your account to another person in whose name the cheque has been issued. If you want more leaves in a cheque book the bank may charge extra money. The charges for the cheque book vary from bank to bank.

Charges for non-maintenance of minimum average balance-

Some banks provide a savings bank account where the customers need not keep a minimum average balance while the other banks require the customers to maintain a minimum balance. The charges for non-maintenance of minimum average balance vary from bank to bank and the banks can charge you for not maintaining a minimum balance.

Debit card fees-

The banks provide debit cards to their customers that can be used for cash withdrawal, shopping, bill payment, etc. The debit card fees vary from bank to bank. The debit card fees are one of the important charges in a savings bank account.

Cash transaction charges-

In a savings bank account, a person can both deposit and withdraw cash. But there is a limit on the number of times you can deposit or withdraw money for free and this varies from one bank to the other. On doing cash transactions above this limit the customer has to pay a charge. This is known as the cash transaction charge. A person should be aware of the number of times he is allowed to make free transactions.

Foreign transaction charges-

If you regularly travel overseas you have to find out what your bank charges for the transactions overseas.

ATM fees-

How far are the ATM branches of your bank? Try to find out if your bank will charge money if you transact outside the network.

Account closure charges-

Account closure charges vary from a bank to another bank and if you want to close the account for some reason the bank will charge you.

5) It is helpful to have a bank branch nearby-

The accessibility of a bank branch is always helpful. The availability of an ATM near your residence or office is always helpful and convenient. Many people consider this factor while opening a bank account. The younger generation prefers online and mobile banking but still, the presence of a bank or ATM nearby is very helpful. When you travel a lot, you want a bank that has a lot of branches or ATMs so that it is easier for you to access your money. And if you have a 9-5 job and the bank is closed on the weekends how will you withdraw the money? Check for the working hours of the bank.

6) Check the digital features

The digital services provided by the bank should also be ascertained if you are a tech-savvy customer. Digital banking is the digitization of banking activities that were physically provided to a bank’s customers like money deposits and withdrawals, checking saving account, applying for financial products, loans, bill payment, and other account services.

Some of the digital services provided by the banks are-

Online banking.

Personal financial planning- Includes features like loan calculators, premium calculators, financial planning tools, budgeting, forecasting, and tax preparation.

Mobile banking.

Unified payment system (UPI).

A digital wallet like State Bank Buddy.

Rewards and loyalty programs- These programs allow earning points based on a customer’s monthly activities with the bank.

Non-internet-based phone banking like SMS missed calls and USSD banking.

Automatic bill payment.

7) Check for the reviews of the bank

Search online to check for the reviews of the bank where you are considering opening an account. Check for the customer service and if you will benefit from the services that they offer. Pull out branch reviews, consumer complaints, and the opinion of people. If the reviews are bad you will naturally stay away and if the people sound satisfied you can open an account in the bank.

8) Security –

Most of the banks are insured against loss but when it comes to the security aspect it may still vary. Check through the online security breaches a bank has experienced and you can stay away from that bank.

A person can compare the features of some of the banks and decide on which bank suits his interests the most. Some people open accounts where their parents bank because they have developed trust and relationship with the bank and many others prefer the convenience of a national bank with a host of facilities which they can deal with even when they are traveling around the country or migrating to another state. Banking is a service where trust matters and the other important factor is peace of mind. An informed decision can be taken after considering all these factors and the right bank can be chosen for our financial needs.

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