ON OPENING A BANK ACCOUNT
15 KEY FACTORS TO WATCH FOR
By: Ulysses C. Ybiernas | December 7, 2021
When opening a savings account at a bank, it's important to pay attention to several key factors to ensure you're choosing the best option for your needs. Here's a list of things to watch out for:
1. Interest Rates
Annual Percentage Yield (APY)
Compare the APY to see how much you'll earn on your savings. A higher APY means more interest over time.
Introductory Rates
Some banks offer a higher interest rate for a limited time. Make sure to check if the rate drops after an initial period.
2. Fees
Monthly Maintenance Fees
Check for any monthly service charges. Some banks waive this fee if you maintain a minimum balance.
ATM Fees
Understand the bank's fees for using out-of-network ATMs. Some banks reimburse fees for using ATMs outside their network.
Excess Withdrawal Fees
Some savings accounts limit the number of withdrawals you can make each month. Exceeding this limit may incur fees.
3. Minimum Balance Requirements
Minimum Deposit to Open
Some banks require a minimum initial deposit to open an account.
Ongoing Minimum Balance
Ensure you can maintain the required minimum balance to avoid fees. Accounts that require higher balances often offer better interest rates.
4. Account Access
Online and Mobile Banking
Check if the bank offers convenient online and mobile banking options for easy account management.
ATM Access
Determine how accessible ATMs are for withdrawals and deposits. Some banks may only have limited access to physical locations.
Branch Access
If you prefer in-person banking, check whether the bank has convenient branches nearby.
5. Withdrawal and Transfer Limits
AMLA Limits
Savings accounts are often subject to this rule, which limit certain types of withdrawals or transfers (e.g., six per day). Be aware of these limits if you need frequent access to your money.
Transfer Fees
Some banks charge fees for transfers between accounts or to external accounts.
6. PDIC Insurance
Ensure your savings account is insured by PDIC (Philippine Deposit Insurance Corporation). This protects your deposits (in the Philippines) currently up to a maximum of PHP 500,000 per depositor, per bank.
7. Account Features
Compounding Frequency
Check how often interest is compounded (daily, monthly, quarterly, etc.). More frequent compounding means you earn interest on your interest sooner.
Linked Accounts
Some banks offer benefits like fee waivers or higher interest rates when you link your savings account to a checking account with the same bank.
Automated Transfers
Look for an option to set up automatic transfers from your checking account to your savings account for regular savings.
8. Customer Service
Support Availability
Make sure the bank provides good customer support (online chat, phone support, in-person assistance) in case you have questions or issues with your account.
Reputation
Research customer reviews and ratings to assess the bank’s reputation for customer service.
9. Special Offers or Promotions
Sign-Up Bonuses
Some banks offer bonuses or incentives for opening a savings account, especially if you deposit a certain amount within a specific period.
Referral Programs
Check if there are any referral bonuses for bringing in new customers.
10. Account Restrictions
Early Closure Fees
Some banks charge a fee if you close the account within a certain period (e.g., 90 days).
No-Penalty Features
Look for accounts with no penalties for not maintaining a minimum balance or making too many withdrawals.
11. Digital and Physical Security
Online Security Features
Ensure the bank provides strong security for online transactions (e.g., two-factor authentication).
Physical Branch Security
Check the security measures in place at physical branches, including fraud protection.
12. Accessibility of Funds
Speed of Access to Funds
Some savings accounts have hold periods before you can access funds (especially for large deposits). Make sure you know how long it takes to access your savings.
Link to Checking Account
Linking a savings account to a checking account can make it easier to transfer funds when needed, especially if you need liquidity.
13. Account Types
High-Yield Savings Account
If you're looking to maximize your interest earnings, consider high-yield accounts, but be aware they may come with higher minimum balance requirements or fewer access features.
Money Market Accounts
These typically offer better interest rates than traditional savings accounts and may come with check-writing privileges or debit cards.
14. Tax Implications
The interest you earn on savings accounts is generally subject to income tax. Make sure you understand how your interest earnings may impact your taxes.
15. Banking Network
Larger or nationwide banks might offer a broader range of services and ATMs, while smaller regional banks may offer more personalized service but fewer branch or ATM options.
Final Tips
Shop Around
Compare rates, fees, and terms from different banks before making a decision.
Long-Term Goals
Consider how the account fits your savings goals (emergency fund, long-term savings, etc.), and how easy it will be to access or grow your savings over time.
By paying attention to these factors, you can make an informed decision and find a savings account that best suits your needs.
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