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Tuesday, June 7, 2011

Important thing to consider in choosing a Bank for Personal Finance


Important thing to consider in choosing a Bank for Personal Finance

Most of us, are always planning to keep and save more money for our future. To keep our money safe at the same time its growing, we deposited our money to a banks. Nowadays, one of the most important aspect in personal finance is banking. Depending on the chosen bank, wealth-building can be easy and optimized if you choose the right bank for you. Below are the important things to consider in choosing a bank:

1. Bank Credibility 
The first and most important things to consider in choosing a bank. Why? Since you are going to park your money to the bank so it is only important that the bank is credible and with good historical performance in managing assets.

2. Number of Branches and ATM machine
People now are more mobile than before and constantly travelling. Choosing a bank with many branches and ATM machines are very convenient to do transaction anywhere. Emergency fund should be kept in the bank with the most number of ATM machine so that money will be available anytime. Also, this will minimize the chance of transacting using other bank's machine which will cost a lot of withdrawal fee.

3. Minimum Initial Deposit
Depending on your available cash, banks will require a minimum amount for initial deposit. For people with limited budget, the bank with minimum initial deposit is a way to go just to kick-off your saving/investing habits.

4. Internet Banking
In this modern world, internet banking is a must. Most bank with internet banking platform allows fund transfer or remittance, paying bills and taxes, online shopping and investing right at the click of the mouse. Very convenient, time and money-saving and less risky of doing transaction since you don't need to bring the cash with you. Just be careful not to give your password to anyone.

5. Maintaining Balance
This is the most important thing that you must know about your bank. I have heard a lot of times about complains why their savings account were closed only to find out that their savings account has breached the maintaining balance requirement. In choosing savings account, the lower the maintaining balance the better.

6. Withdrawal Limit
The higher the withdrawal limit the better specially for emergency funds account.

7. Withdrawal Fee 
Choose the bank with no withdrawal fee when using their own facilities. Of course all banks requires withdrawal fee if you use other bank's machine.

8. Investment Tie-Ups
Choose the bank that has a tie-up with your investments like stocks, mutual funds, UITF and etc. Big universal banks like BPI and Metrobank are the best choice for investment purpose since it has its own brokerage and investment arm(s).

9. Interest Rate
This is my last and  least important things to consider. Banks in the Philippines give only 0.5-1.5% annual interest rate and is not even sufficient to hedge against inflation. Beware of fly-by-night banks who will offer interest rate higher than this since historically those banks are prone to bankruptcy. Suggestion is to stick to the big credible banks even with small interest rate at least your money is more safe.



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