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Choosing the Right Bank Account: A Comprehensive Guide by O1ne Mortgage

Since the advent of online banks, checking and savings options have become increasingly diverse in their benefits, fees, and other features. As a result, it can be difficult to know which one is the right fit for you. While there’s no single best bank account out there for everyone, knowing your financial needs, goals, and preferences can help you determine which one is the right fit for you. Here’s a step-by-step guide to choosing a bank account.

1. Review the Types of Bank Accounts

There are a handful of different types of bank accounts, each with its own set of features and purpose. Depending on your needs, it’s a good idea to know which type of account will best serve them.

Checking Account

A checking account is likely what most people picture when they think about bank accounts. It’s designed for your everyday financial management, including deposits, withdrawals, bill payments, and more. Some checking accounts may charge monthly fees, but you can often get them waived with certain activities.

Savings Account

Savings accounts are generally used as a place to park your cash for future use. Whether it’s an emergency fund, a down payment fund, a vacation fund, or whatever else, a savings account is often the best place to put your short-term savings needs because it’s safe—the FDIC insures savings accounts up to $250,000 per account owner—and easily accessible.

High-Yield Savings Account

Some banks and credit unions offer high-yield savings accounts that provide much higher interest rates than the average savings account. These are often offered by online banks and credit unions, but may be available with some traditional banks. They usually don’t charge monthly service fees.

Money Market Account

Money market accounts function as a hybrid between a savings account and a checking account. Like savings accounts, they typically offer higher interest rates than what you’d get with a checking account, and they also limit your withdrawals every month. But they also allow you to access your money via paper checks.

Certificate of Deposit

Certificates of deposit (CDs) typically offer higher interest rates than even high-yield savings accounts and money market accounts. In exchange, though, you typically have to tie up your money for a set amount of time, which can range from a few months to several years.

2. Decide Between a Brick-and-Mortar Bank, Online Bank, and Credit Union

Historically, brick-and-mortar banks and credit unions were the only options. But in the past two decades, online banks have become more popular. Here’s a quick summary of each and their pros and cons.

Brick-and-Mortar Banks

These institutions typically offer a lot of services in addition to banking, such as investments and loans. If you want to keep all of your finances in one place, these may be the best option. They also usually have physical branches, which are good if you use cash often or prefer in-person service.

Online Banks

Online banks don’t have the overhead costs of brick-and-mortar banks, so they tend to offer many valuable features. For example, some offer:

• Rewards when you use your debit card
• ATM fee reimbursements when you use out-of-network machines for withdrawals
• Low or even no fees
• Early direct deposit
• High-yield savings and even checking accounts

Credit Unions

Credit unions are not-for-profit organizations owned by their members. Instead of maximizing profits for investors, they return their profits to their customers in the form of lower fees and higher rates on deposit accounts.

3. Understand the Fees

There are few, if any, bank accounts that are truly fee-free. Even if you get the main costs waived, you may still incur a charge if you send a wire transfer, request a stop payment on a check, or use your debit card abroad.

4. Consider Other Features and Perks

Depending on the bank and the account, you may come across other valuable features that can add value to your banking experience. Here are just a few to keep in mind as you shop around:

• Introductory bonuses: Some financial institutions offer bank account bonuses, allowing you to get hundreds of dollars in some cases when you meet certain requirements, such as receiving a minimum amount of direct deposits, maintaining a minimum balance, or making a certain number of debit card transactions.
• Rewards: Some accounts offer cash back or points on your debit card purchases, but make sure you understand potential requirements to qualify for rewards and also limits on how much you can earn.
• Money management tools: Some banks and credit unions may offer tools to help you better manage your money. Potential features may include access to your credit score, budgeting software, spending insights, automatic savings transfers, and more.

Having Multiple Bank Accounts Can Help Maximize Their Value

It may be a bit more complicated to have more than one bank account with different institutions, but it can also help you take advantage of the best features that multiple accounts can offer. For example, you may choose to use an online bank account for most of your transactions, but keep a traditional bank or credit union account for cash deposits and in-person service when you need it.

Regardless of what you choose to do, take your time to carefully consider all of your options to find the best strategy for your needs.

Contact O1ne Mortgage for Your Mortgage Service Needs

At O1ne Mortgage, we understand that choosing the right bank account is just one part of managing your finances. If you’re in need of mortgage services, our team of experts is here to help. Call us today at 213-732-3074 to discuss your mortgage needs and find the best solutions for you. We look forward to working with you!

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