Victory State Bank Shares 10 Tips For Selecting A Bank Account
STATEN ISLAND, N.Y. -- It's important to have a banking product to handle everyday financial needs that range from making payments to getting paid. There also is no shortage of options — from different kinds of checking accounts to products such as prepaid cards that, at first glance, may seem like convenient alternatives to bank accounts but may lack the federal protections for insured accounts.
How can you choose what's best for you?
FDIC Consumer News has developed a 10-question self-test to help you focus on what you want most in a bank account, plus additional tips to help you narrow your choices and make a good decision. Ready to get started?
QUESTIONS TO ASK
1. How do I want to deposit money into an account?
If you're not already having your payroll, pension, Social Security payments, unemployment benefits or other income directly deposited into your bank account, look into it. Direct deposit may save you money on fees, plus you will receive the payment more quickly than depositing it in person.
For checks that you need to deposit into your account, consider how you'd prefer to do that (in person, electronically, by mail) and if a bank you're looking at would be a good choice.
2. How do I plan to pay bills or purchase goods?
More people are using debit cards instead of writing checks to draw money from their checking account, in part because of the convenience and speed. The FDIC recently conducted a pilot program at nine institutions offering electronic, card-based accounts and found that "checkless checking" can reduce the risk of overdrawing accounts.
If you want to pay bills online, explore what the bank offers and whether there are any fees. "The potential benefits of online bill-paying services include a confirmation that you paid the bill, and with some institutions, a guarantee that any payment you originate will be delivered on a set day," noted Luke W. Reynolds, Acting Associate Director of the FDIC's Division of Depositor and Consumer Protection
3. Do I want to monitor my account electronically?
Telephone and online access to accounts is increasingly becoming the norm. But if you want to monitor your account activity and balance using a smartphone or tablet computer, find out whether these features are available.
Electronic alerts from your bank can save you money. Options may include text or e-mail messages if your account balance reaches a threshold you set (say $10), so you can curtail spending or add funds to avoid overdraft fees.
4. What are my options for withdrawing cash?
Find out if the bank has branches or fee-free ATMs you can use close to where you think you need them, perhaps near your home or work.
You also may be able to get cash from your account when you make a purchase with a debit card at certain merchants, but this can lead to unnecessary expenditures.
5. Are there features that can help me put more money into savings?
Many consumers find that setting their savings on auto-pilot — by automatically transferring money into a savings account on paydays or at other regular intervals — is the easiest way to build a rainy-day fund or achieve other savings goals. "Paying yourself first is the most effective way to ensure that you set money aside because, as the saying goes, 'What you don't see you probably won't spend,'" noted Lekeshia Frasure, Acting Chief of the FDIC's Outreach and Program Development Section.
6. What will the new account cost?
Pay careful attention to how much money you may need to open and maintain the account. For example, what does the bank charge for falling below the minimum balance requirement?
7. Have I compared several institutions?
Look at each bank's disclosure of fees and key terms. The types of fees may vary considerably from bank to bank. Also compare the products and features a bank offers on its Web site to what you are told in person; it's possible that a special offer may be available through certain branches only and not online, or vice versa.
By comparison shopping based on the fees and how you expect to use your account, you should be able to predict what each account will cost you.
8. Am I giving too much consideration to "rewards" or other special offers?
"One-time deals, whether they involve cash or merchandise, can induce consumers to select an account that isn't necessarily the most cost-effective," said Reynolds. "Likewise, with specials that won't last the life of the account, such as an interest rate bonus that will only last a few months, compare the regular terms and conditions of the account to what the competition is offering to decide if the account is right for you for the years ahead."
Also carefully evaluate the requirements to qualify for any special offer and determine if that is consistent with how you already manage your finances. For example, if you expect to use a debit card infrequently, don't sign up for an account that offers a special interest rate that is conditioned on making a dozen or more debit card transactions per month.
Frasure also warned to be especially cautious when the reward is based on making purchases. "Don't let down your guard against unnecessary spending in order to earn rewards," she said. "If you are spending more than you would at another bank, those 'free' rewards may end up costing more than you think."
9. Will all my deposits be federally insured?
This is important to know before opening an account or making a sizable deposit in the future. The FDIC guarantees deposits up to at least $250,000 per depositor per institution, including principal and accrued interest, if the bank fails. If you have less than $250,000 in a bank account, you can rest easy knowing that no depositor has lost a penny of insured funds since the FDIC's creation in 1933.
For help or information regarding FDIC insurance coverage, call the FDIC toll-free at 1-877 ASK-FDIC (1-877-275-3342) or visit www.fdic.gov/deposit/deposits.
10. If I'm thinking about using a prepaid card to pay for purchases, is it the case that they may have fewer consumer protections than a traditional bank account?
Generally, bank checking accounts, including any cards linked to an account, are covered by comprehensive consumer protection laws that, for example, limit how long a bank may hold a deposit before making funds available or offer protections in the event of fraudulent activity.
About Victory State Bank:
VSB Bancorp, Inc. (NASDAQ: VSBN) is the one-bank holding company for Victory State Bank. As Staten Island, N.Y.’s only community-based commercial bank, Victory State Bank operates five full-service locations on the Island: The main office in the community of Great Kills, and branches in the communities of West Brighton, St. George, Dongan Hills and Rosebank. For additional information, Victory State Bank may be reached at 718-979-1100 or visited online http://www.victorystatebank.com .