Thursday, Feb 2, 2023
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Five things you must know before opening bank account

IFM_Bank Accounts
If you are a US citizen and opening a bank account for the first time, be careful about the overdraft fees

Primary Bank accounts are those which act as the main operation accounts of a customer. From here product purchase transactions, credit/debit card fees, and charge payments get carried out. While it’s an absolute must for basic financial planning by an individual, banking features are also something someone needs to be mindful of, while opening an account.

As per a recent United States Federal Reserve survey, mobile banking has been the latest trend, with nearly half of smartphone owners using the particular service.

Here are the five qualities one should look out for before opening his/her account.

Bank Cards 
The most used bank cards are the debit and credit ones. The debit card is also known as a check card. It facilitates cashless payments. A credit card, on the other hand, is another payment card, using which the consumers can pay for goods and services, based on their accrued debt (promise to the card issuer/bank to pay the latter for the amounts and agreed on charges). For a debit card, the purchase money should be there in the customer’s bank account and after the purchase is made, the money gets transferred from the source account to the merchant.

As per another Federal Reserve survey, some 30% of US consumers preferred a debit card while making payments. So, while opening a new savings account, the first thing you need to check is whether the bank provides a debit card or not. For credit cards, choose banks offering good cash-back rewards.

A good example is Bank of America’s BankAmericard Cash Rewards credit card, where customers can earn up to 3% cash back on purchases, along with a USD 200 bonus. The bonus will only be applicable if the customer applies for it online and then he/she can spend USD 1,000 in purchases within the first 90 days of account opening.

Online/Mobile Banking Facilities
If you are a US citizen and opening a bank account for the first time, be careful about the overdraft fees (fees charged by banks for withdrawing more money than the customers’ actual bank balance).

In this case, if you are taking out money without a prior understanding of your account balance, the bank will lend some capital to you. However, later, you will have to pay both the overdrawn money and overdraft fees, and yes, it can get expensive.

However, to keep a watch over your account balance, traveling to the bank frequently is not a viable option, as it costs time and money. So if you have an online banking option, you can check your bank balance on your laptop/smartphone screen.

For check deposits, take a picture of it with your phone, and then using e-banking pathways, you can deposit the amount from your home or office.

Using online banking tools, you can even pay your bills, without issuing checks. All you need to do is automate your payments on your net banking app. You can also avail text and email alerts for your accounts, so the bank can intimate you through messages and emails about your account balance and transaction records. This feature comes in handy, in case your account details get compromised by a cyber-hacker and the person is trying to siphon off the money at your expense.

Account Security Matters
The 21st century is all about going cashless. Since online payment, along with digital and mobile banking has become the go-to option for customers, data security and privacy become important as well. And yes, data breaches do happen. Apart from banks lacking state-of-the-art, strong cybersecurity measures, sometimes customers make mistakes such as giving shorter passwords and using details like names, house addresses, birth dates, simple number combinations, and most importantly, not updating the passwords regularly.

In case of data theft, not only bank’s brand value gets damaged, the customers’ hard-earned savings get wiped off in a matter of minutes or seconds. You have to block your credit and debit cards, apart from keeping a constant watch on your phone/laptop screen to track your account activities. Even canceling bank cards doesn’t help, as the hacker has already got access to your private and sensitive information.

A 2022 survey from Ipsos-Forbes Advisor survey says that 78% of Americans use digital banking, so if you are one of that 78%, make sure that your bank is following protocols such as Two-factor, or multifactor, authentication (second layer of security verification for online accounts), encrypted email messaging, automatic logout for online accounts.

Also before downloading the banking app, check whether it’s official or a duplicate one. Check its security ratings, and do a simple Google research on the app’s security policies and anti-hacking mechanisms. The review part becomes crucial, if you are downloading it from the App Store/Google Play.

Attractive Interest Rates & Fewer Fees
Even if the central banks across the world have been raising the interest rates throughout, for savings accounts, it’s not increasing.

For example, in the United States, despite the Fed rate hike, the average interest rate for interest-bearing checking accounts has been around 0.04% currently. For saving accounts, the rate is at 0.05%.

So, with such a low-interest rate, your monthly returns from these savings accounts won’t be enough in this inflation cycle. So, choose a bank, which offers you less usage fees.

In case you use ATMs other than the ones provided by your bank, try to open accounts in financial institutions, which waive ATM surcharge fees. If the bank is not putting minimum account balance requirements, that will be a cherry on top.

Bank Giving Loyalty Perks?
In case you want to open an account with a bank, with a long-term plan of sticking with the particular financial institution, please check for their customer loyalty perks and incentives. Check for offers such as free checks, travel rewards for meeting balance requirements, and no account maintenance fees for a certain period of time. For example, people in the United States can get up to USD 200 deposited into their accounts after opening Chase Total Checking accounts with direct deposits.

Another US-based financial institution, Citibank offers a loyalty programme called “Citi Thank You Rewards”, where customers can earn points through ways such as using a Citi credit card, banking with Citi using an enrolled checking account, as well as adding qualifying services and products to an existing Citi checking account. Citi customers can then redeem the collected points for cash back at up to 1 cent per point, which means collecting 10,000 points will give them USD 100 in cash. Customers can also shop directly using the points at branded retailers. They can also exchange these points for gift cards, which then can be used at countless places, such as restaurants, hotels, airlines, and many retailers.

JPMorgan, US’ largest bank, also has a points-based bank loyalty rewards scheme called One Card. Using this, consumers can collect points. Each of these points is equivalent to a dollar and yes, these points don’t expire. They can be used for cash credit, travel, and gift cards.

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