By: Sajeel Jagjivan
Bank accounts are a lot like shoes – there’s no such thing as a one-size-fits-all option, and the best one should perfectly match your individual style. Because every individual is unique, it’s essential that we each choose a bank account based on our personal needs, not just because it appears cheaply priced. Five key questions that you need to ask yourself before choosing a bank account:
1. Do I want to shop on price or value?
Often when you think you’re getting something cheap, it’s not always the case. Always keep this in mind when choosing a bank account. There’s a big difference between ‘affordable’ and ‘cheap’. While it may be great that a bank account appears cheap, if it’s not adding value to your money and your life, it could be costing you more than you’re saving.
2. What do I need the account for?
A bank account is not just to store money but a service that enhances your quality of life and must meet your unique financial and banking needs. To find a suitable bank account, you need to know your needs and how you plan on using it. For instance, many of the low-cost, or free, bank accounts available, don’t charge a monthly fee, but make you pay for most of the transactions you do monthly and at a higher rate than those accounts with a monthly fee. That means, if you will be transacting a lot, you pay more. Therefore, it may be better to look for a bundled account that includes most transactions in a low monthly fee.
3. How do I want to interact with my account, and my bank?
Customers mainly utilise a transactional account to deposit funds and make payments. The economy currently works off a mix of cash and digital transactions. Over time there has been a massive shift towards digital banking. Digital is quick, convenient, and cost effective. Therefore, you need an account that gives you the option to transact digitally as much as you like but can also solve your cash needs
In addition to transactional functionality, you may also need to get in touch with a real, trained and understanding advisor when you have more complex needs or questions so make sure that you choose a bank that is there to help you.
4. What am I going to need from my bank, and account, in the future?
You will need a bank account for the rest of your life so it is important to have a bank account that can adapt and grow with you as your needs change through the different life stages. As your income grows and your family evolves the solutions you require get more complex. The ideal choice is a bank that not only advises you on the products required to solve your needs but provides them as well. A bank that can include future requirements like overdrafts, credit cards, and investment options.
5. What rewards do I get?
Most banks offer reward programmes. While these can seem very enticing, it’s important to fully understand how the rewards on your chosen account work, how easy it is to earn and redeem them, and whether they add value.
In the end, choosing the right bank account for you is a very personal experience and it’s not a decision that should be made without careful consideration. It's important to choose an account, and a bank, that you are sure can cater to your specific financial and lifestyle needs now and into the future, so don’t just settle for the cheapest option; rather find the account that adds real value now and has the capability to evolve with you and continue to add value into the future.
* Sajeel Jagjivan is the head of pricing at FNB.
PERSONAL FINANCE