Finding the right bank…

         There was a time when banking was far more personal. One would have to go to the bank physically either to make deposits or make withdrawals on a regular basis. Now things are different, it is possible to live one’s life without ever seeing the bank you do business with. People are becoming used to doing banking on their phones and laptops from anywhere in the world. For finance, this is a revolution. Not having to physically go to a bank and being able to press a couple buttons to get everything done is a blessing.

        Banks are more than just places to hold money. You might have heard the story of someone who always kept their money under the mattress or in an old coffee tin because they thought banks were not necessary, well they may have a point for some situations, however for the most part, a bank is beneficial for most who have money.  

        What makes a good bank different from a bad bank?

   A bank that excels can be differentiated from one that doesn’t in several ways. An exemplary bank operates with safety and reliability, delivers top-notch customer service, provides a broad range of offerings to fulfill the varying demands of its clients, and shows dedication to serving the communities it operates in. Some of the traits that set apart a superior bank include:

1. Financial soundness: A superior bank has a strong financial foundation and is able to withstand economic hardships. This includes a sturdy balance sheet, prudent lending practices, and a robust capital structure.

2. Customer-focused service: A superior bank prioritizes the needs of its customers and has a knowledgeable and trained staff. It offers accessible services, such as mobile and online banking, for the convenience of its clients.

3. Attractive interest rates: A superior bank offers interest rates that are competitive for deposits, loans, and other financial products, helping it to attract and retain customers.

4. Ethical behavior: A superior bank operates with integrity and fairness towards its customers, providing clear disclosure of fees and charges and responsible lending practices.

On the flip side, a bank that falls short might engage in actions that harm its customers or the stability of the financial system. These can include making high-risk loans, unethical sales techniques, or inadequate protection of customer data.

It’s worth noting that even banks that excel  and are well known can encounter issues or make mistakes, but what sets them apart is their commitment to quickly rectifying and addressing these issues. It is also worth noting that many “banks” are actually subsidiaries of other larger banks. It is never a bad idea to find out what bank owns the bank you are doing business with if they are owned by someone. The negative behavior and issues of the larger bank may filter down to its subsidiaries.

So.. Can a mattress beat a bank?

     No. Unless you don’t mind the possibility of someone taking it, the house burning down, or the fact that your money is just sitting there not working for you. A lot of people don’t mind any of those negative aspects and if they want to keep their holdings in a mattress, so be it. 

     However.. In this day and age, unless you are just disconnected and off the grid in a major way, you need a bank. 

Individuals seek out banks for several reasons, including:

1. Safe storage of funds: Banks provide a secure location for individuals to store their funds, which is essential for protecting their assets. They also offer various account options, such as savings accounts, checking accounts, and certificates of deposit, for effective money management.

2. Credit access: Banks are a major source of loans for individuals and businesses. They offer access to credit, which can be utilized for a variety of purposes, such as buying a home, financing a car, or starting a business.

3. Financial organization: Banks offer several services to help individuals manage their finances, including online and mobile banking, bill payment options, and budgeting tools. These resources help individuals stay on top of their finances and make informed decisions regarding their money management.

4. Investment options: Banks offer a range of investment products, such as mutual funds, stocks, and bonds, which can aid individuals in growing their wealth and accomplishing their financial objectives.

5. Expert advice: Banks often have financial advisors and specialists who can provide expert advice and guidance on a variety of financial matters, including saving for retirement, managing debt, and creating a budget.

For the best financial health, a bank is an important piece in the ultimate picture.

So I decide to use a bank. What can they do for me besides hold my money?

   Now banks have other roles to play than just keeping YOUR money safe. Keep in mind, money in the bank is far safer than in your possession due to many factors. A main one being that it is insured if the banks go under, not to mention it is under lock and key and also out of sight, out of mind. That last reason is pretty huge in my opinion. Unless you are the type of person that has a high level of self restraint and self discipline, it is better to have funds away from one’s reach for saving purposes rather than to risk the possibility of having a sizable chunk of cash on hand and running into a prime deal on some hot device or gorgeous piece of clothing you always wanted and before you know it, you are a bit poorer and have one more thing you never use.

       Banks provide a place to talk to someone knowledgeable about your finances, they also offer source of funds through credit and loans.  2 things to remember about the preceding sentence. Banks CAN provide a place to talk to someone knowledgeable about your finances, it does not mean such talk is always in your favor, banks are a business, and often they employ people who are trained to sell their products, not to prioritize your financial well being. The thing about credit and loans is that just because one can take a loan out, definitely does not always mean one should. Credit agencies do consider the type of credit, the length of time a person has credit and the amount of credit that you have available. If you have a car loan or home mortgage that you have been paying off and doing so regularly without being late, that has a good impact on your credit. In simple terms, borrowing money, paying it back on or before  the due dates and keeping it paid down instead of just renewing the same debts will take your credit rating higher. The key is to borrow it at a reasonable interest rate and pay it down. Having large amounts of credit debt that gets paid down but that gets filled back up again, that can be a very vicious and unproductive cycle. But the main idea is to be free from debt ultimately. Whether that means to create as little debt as possible or if you have to , pay it off as quickly as possible.

Here are some good credit habits to keep in mind:

1. Pay your bills on time: Paying your bills on time is one of the most important habits to have. Late payments can damage your credit score and make it harder to get credit in the future.
2. Keep your credit utilization low: Your credit utilization ratio is the amount of credit you’re using compared to the total amount of credit available to you. Keeping this ratio low can help you maintain a good credit score.
3. Monitor your credit report regularly: It’s important to check your credit report regularly to make sure there are no errors or fraudulent activities that can negatively impact your credit score.
4. Use credit responsibly: Only apply for credit when you need it, and don’t use your credit cards to make purchases you can’t afford to pay off in full each month.
5. Maintain a mix of credit types: Having a mix of credit types, such as credit cards, loans, and a mortgage, can demonstrate your ability to manage different types of credit.
6. Keep old accounts open: Keeping old accounts open can help improve your credit score, as it shows you have a longer credit history.
7. Limit credit inquiries: Applying for too much credit at once can negatively impact your credit score. Try to limit the number of credit inquiries you make, especially within a short period of time.

By following these habits, you can help maintain a good credit score and improve your chances of getting approved for credit in the future.