Money Minute 2: Choosing an Institution
When dealing with your hard-earned money, keeping it somewhere safe and trustworthy is an important concern. Making sure that your primary financial institution is FDIC ensured is essential, should an economic crisis occur. Some banks and credit unions are more reliable than others and trustworthy about fees and limits in account usage. It can be difficult to choose a bank because of the many options that are available.
Convenience is an important factor when choosing a specific bank or credit union. Having a nearby brick-and-mortar institution is not nearly as important as it used to be in the previous century because of the internet. Most large banks in the US have online services and mobile apps. Smaller banks tend to have outdated services that are less reliable. Some people may find services like PayPal and Square Cash as a convenience, but these are money transferring services, not banks. While PayPal and other services allow you to technically store a balance, they are not obligated to follow consumer-protecting banking regulations in the United States, and they do not loan money. In the United Kingdom, PayPal is recognized as a bank and must follow the local regulations.
In order to find the “right” place to store your money, research is needed. Most of the information needed is available by searching online, as well as by reaching out to banks you might be interested in. Many other people have done all the research on individual institutions and posted their thoughts on the different pros and cons of different banks and accounts online. You need to look for things relevant to you. Likely, it’s more convenient to have multiple accounts from a single bank than to have across several banks, because it is often easier to transfer funds between accounts. Some banks charge fees to transfer funds outside of their institution, while others do not. There are also options of overdraft protection on checking accounts, such as instantaneously pulling a balance from a savings account or running a temporary line of credit.
Coming up: KEEPING TRACK OF BILLS