Tips For Choosing a Good Bank & Staying out of Debt
Staying out of debt, and safe keeping of your money
When it comes to understanding finances and staying out of debt, one of the number one things to do is have a good bank and bank account. They can safely store your hard earned money and make it work for you. Most people think of a bank as the safest place to store your money. Ever since the government created the FDIC, or Federal Deposit Insurance Corporation, it is safer than ever to store your funds there. This was due to the banking disasters and depression that followed the stock market crash of 1929. What the FDIC does, is to guarantee each bank depositor against potential losses. These losses could be up to 100,000 should another bank failure occur.
When choosing a bank, you want to consider several things. The main things to consider are the cost, level of service to its patrons, and convenience. Feeling confident in depositing your money into your bank is a great thing, and can help in getting out of debt or even preventing debt in the first place. It is a way to encourage the opposite as well, savings! The idea is to spend less than you earn, and save the rest. Even if you earn only a very little bit of interest say in a savings account, its still something and is definitely safe!
Most people get a bank account for a checking account and perhaps a savings account. The checking account is great for handling your everyday financial needs. Many banks have other added benefits as well. Some banks offer a direct deposit option, where your paycheck gets directly deposited right into your account. I have always loved using this option when it is available. It saves a trip to the bank, and you have access to your funds as soon as possible. It can be deposited into the account of your choice usually.
Some banks offer bank cards so you can access the ATM machines even when the bank is closed. I like the options of a debit/credit card as well. A credit card linked to your bank account can have lots of benefits. Often these accounts include a line of credit that you can use in the case of an emergency.
Automatic Transfers Whether for your investments, or for use in paying bills, having the option to transfer funds can be very helpful.
Overdraft protection This is something worth having, even if you are pretty sure you will never need it. By having a back up plan if your funds should be short, you can save a lot of embarrassment and extra fees. Many bank credit cards have an overdraft option. If your checking account gets too low, it draws from your credit card. Very easy, almost too easy.
Reading the fine print, and asking any questions is always helpful and can help you become aware of something you maybe didn't know was part of the account you are setting up. I would ask about any and all fees, late charges, and charges for anything extra like too many withdrawals from particular accounts.
What you need
If you are ready to take the plunge from moving the "money under the mattress", and into a bank account, have a few things handy. You will want to take the money you are going to deposit, your photo identification, and your social security number. Often they need proof of some bill like an electric bill to verify your current address. I don't mind these extra precautions, because I know they are being careful and that is something you want in a place that is holding your money.
For your money to deposit, they will take cash, checks and money orders usually. There is almost always a minimum amount. Passports and driver's licenses are perfect for photo identification. Often there is a signature card to sign, so as to have our signature on file to use for banking services. This is another measure to protect you.
Banks will often have options for investing as well. You can usually invest in mutual funds, annuities and sometimes brokerage accounts. A good bank will often have free financial planning available. If they can help you and others become more financially successful then they can be more successful as well. Ask around to the people you trust, what banks they have come to trust and rely on over the years.
Writing this takes me back to when I was a young girl, getting my first savings account, with the little pass book. My grandmother took me, and it was a very special day and I was so proud to start saving my money and keeping track of it. Its not a bad idea to find a bank that welcomes this as well for when your own children are old enough to get an account of their own. Its helpful when they have money from a birthday or Christmas to put it away so that it isn't "burning a hole in their pocket". I wouldn't force it, but offer the idea as they get older, and tell them how it benefits them. When it comes to preventing debt, this is a great way to start. Helping the next generation to be wise with their money is a great gift.