Banking Articles

Choosing the Right Bank

Choosing the right bank for your needs involves some homework, like comparing costs and services, and asking right questions. We’ll help you get started, by pointing out the rates, fees, and features to compare, and what questions to ask.

Three helpful rates to know are the, Interest Rate, Interest Compounding Rate, and Annual Percentage Yield (APY).
The interest rate is a percentage of your funds that a bank pays you for the use of your funds. Know what the interest rate is, and ask whether or not the bank can change the rate after opening an account. You may also want to know if the interest rate varies, depending upon your account balance.

Interest compounding is the frequency your interest is added back in to your account. So you’ll start earning interest on interest! Ask how often your interest is compounded. And the annual percentage yield is the percentage of interest you’ll earn per year, which is good to know when making investment decisions.

There are also a variety of fees associated with a bank account, and it will help to know which ones apply to you. Are there ATM or Stop-Check fees? Are steps you can take to reduce fees? What are all the recurring monthly fees? Which fees apply to special circumstances or unique services? These are all important questions to have answers to.

It’s also a good idea to know what other features your bank may offer, like account protection or withdrawal limits. What happens if you decide to close your account? Or how soon can you withdraw funds once they have been added to your account?

There is much more to be aware of when choosing the right bank for yourself, but with thorough investigation you’ll be well on your way to knowing how to wisely manage your finances.

Copyright © 2006

Sterling State Bank in Minnesota provides personal banking, business banking, loans, and insurance packages to meet all your financial needs.

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