Choosing the right bank is an important step. As with any financial decision, it’s important to figure out what you want and need beforehand. There are several banks to consider. There are also credit unions and microfinance institutions, which some people opt to use instead of or in addition to the banks for your savings and credit needs.

Here are a few things to consider before you open a bank account:

• Location.  Does the financial institution have branches in the areas where you work and live?
• Availability of ATMs.  The ATMs owned by your bank won’t charge you to withdraw cash, but other banks’ ATMs may. Does the financial institution have machines in locations that are convenient for you?
• Customer service.  Does their customer service offering fit your needs?
• Online banking. The Internet has made it very convenient to keep track of your finances online. Make sure the institution you’re considering provides online access to your account.
• Credit unions are an option. Credit unions differ from banks in several ways. They’re designed to serve a particular group or neighbourhood, and users are members rather than customers.
• Microfinance Institutions.  Microfinance Institutions focuses in banking services for low-income groups or individuals. A microfinance institution provides account services to small balance accounts that would not normally be accepted by traditional banks, and office transaction services for amounts that may be smaller than the average transaction fees charged by mainstream financial institutions.

These days, banks, credit unions and microfinance institutions are more than just places to keep your money. Many serve as one-stop financial service shops. In addition to savings accounts and credit cards, here are some services and products offered by most financial institutions:

• Credit cards
• Lines of credit
• Personal, business and car loans
• Mortgages
• Online or mobile banking
• Automatic bill pay
• International banking
• Financial planning
• Investment Management
• Health, home and car insurance
• Retirement programs

Having all of these services in one place can provide not only convenience, but also savings. Some financial institutions will offer lower fees and higher interest to customers who use multiple services and products.

Opening an Account

Once you’ve decided on a specific bank or credit union, you’ll want to open a bank account. A good bank account is an essential tool for building solid personal finances. It makes managing your money easier, and over time it will save you money.

• Convenience. A bank account allows you to pay bills without heading to the post office, and it’s especially easy if you use your Internet bank account to pay your bills.
• Keep good records. With a bank account, you have an official record of every purchase you make with the account, as well as money you receive and deposit. This can come in handy when crafting a budget, preparing your tax or as proof of payment. Each month you’ll get a statement tallying every purchase you’ve made.

Choosing the Right Account

Most banks and credit unions offer a variety of bank account options. Some are free and others carry a monthly fee. Often fee free accounts require you to maintain a minimum balance.

Pay particularly close attention to the additional fees that a bank may charge. The charges are generally small – from 10 cents to several dollars, but they add up. Here are some of the most common fees:

• ATM Fees. If you withdraw cash from an ATM owned by a bank other than your own, the bank could charge you for not being one of their customers.
• Overdraft Fees. These are fees banks charge customers who withdraw money from an ATM or make a debit card purchase that exceeds the balance in their account.
• Maintenance/Service Fee.These are standard fees banks charge for maintaining your account and providing you with features and services.

Bank accounts can also earn you money. Some offer interest, just like savings accounts. These can be particularly beneficial if you plan on maintaining a large balance.

How do Banks and Credit Unions Differ?

At one time, credit unions specialised primarily in low-interest loans and savings accounts, but not other services. But most have increased their range of services offered, with many now offering regular savings accounts, student loans and mortgages. Some people opt to maintain savings accounts with credit unions, since they tend to offer higher interest rates, and an everyday account with a traditional bank to ensure they have greater accessibility to ATMs and more. Deciding which type of institution will work best for you is a personal choice. Here are some of the main differences:

Banks:

• Generally run by a group of investors with capital
• For profit
• May offer greater accessibility and a wider range of services

Credit Unions:

• Controlled by members
• Not for profit
• May offer lower-cost services and higher interest rates on savings

Microfinance Institutions

• relationship-based banking for individual entrepreneurs and small businesses;
• group-based models, where several entrepreneurs come together to apply for loans and other services as a group.