Opening a Bank Account: Which Bank to use?
What is a bank and how do you pick one?
Now, Jonah and Edna had seen many banks on the main street when they went to town.
“Which one should we go to?” thought Jonah.
They weren’t even sure what exactly a Bank does.
So, off they went to one of the banks and asked the bank manager to explain to them what a bank does and how it could help them.
The manager explained to them that a bank is nothing more than a place where people can keep their money for safe keeping and where people can also borrow money when they need it.
But how do I know which bank to use?” asked Jonah
“Well”, replied the bank manager, “The first thing is to ask your self these simple questions”
- Is the bank close to you?
- Does the bank offer services you need, like online banking and mobile banking?
- Does the bank offer the products you need in the next few years? Like RESPs for your education, RRSP’s for your parents retirement, Mortgages and Loans.
- Does the bank treat it’s customers well?
Jonah nodded, he knew it would be nice to have a bank close by and be able to go there as needed.
“But how do you select which bank when they are all on the same street?” ask Jonah.
“There are basically 4 kinds of banks”
Big Banks – are large institutions that have branches everywhere. They have almost every product, they are for profit organizations which means that their goal is to make money whenever you deposit to withdraw money, the fees tend to be high, they don’t normally have the best interest rate on savings, however, they are found everywhere so are very convenient to get to.
Local Banks- are smaller community banks that typically work only in the local area. Their aim is also to make profit for themselves. They generally offer most products that people need, the fees tend to be reasonable, you may be able to get a better interest rate on savings with advertised “specials”. They are found locally but if you are travelling they will likely not be there. A local bank is part of the local economy so supporting them means supporting the local economy.
Credit Unions – are not-for-profit institutions with a strong community focus. All the profit they make is given back to the members of the credit union by giving them more interest, or giving them cheaper loans. You need to become a “member” of a credit union, and this can be done simply by opening an account. They usually have all the products that people typically need. Fees tend to be low, offer higher interest rates on savings account. Larger credit unions have locations all over and most of them have agreements to use thousands of free locations in other places.
Online Banks. These banks do not have any branches or ATM machines. They are purely online. If you don’t have a need to go into a branch then these banks are good for you. They have several free products where no fees are charged, interest rates on savings accounts tend to be higher. Even though they don’t have branches they may have agreements with other banks that allow you to use their ATM machines.