However, the decision of switching a bank or a bank account is influenced by number of factors.

• Higher Interest Rates
  This doesn’t necessarily mean only interest rates. I am talking about general monetary benefits offered by a bank. Though interest rate given by banks, which is 0.5% currently, is governed by the Fed to a larger extent, other benefits are not. Frugal people select a bank that offers $100 with every new account, or something like that. However, monetary benefits remain to be the most influential factor in switching a bank.
• Service level
  Most of us love exceptional customer service and are also ready to pay a bit extra for it. In my case, I despise calling up Chase (don’t believe me? Try calling them up someday). However, I simply love to contact my local branch bank because I know the manager quite well, and they greet me by my last name, always. So, I prefer it over Chase. However, in addition to calling by last names, a customer service encompasses many other services that provides ease and value-for-money. Hence, it affects the decision of selecting or despising a company.
• Accessibility
  This is one of the most important reasons affecting the choice of bank. And quite obviously, I would choose a local bank that’s near my house instead of Chase, which is around 3 miles away. Ease to access one’s own money is what we pay for, right?
• Security
  With lots of giants being bankrupt recently, people have started being more cautious choosing their banking services. Hence, a minor error or rumor that mentions instability of bank immediately affects its business; people start switching their account to other banks. Hence, security is one of the important reasons now, more than ever.

I have accounts in a couple of banks. However, I haven’t been compelled to switch to other banks because all the above factors are taken care of quite satisfactorily.

One common strategy that we all apply when we don’t have enough money for a new household expenditure is to open a new account to save up money specifically for any new kind of expenditure that might crop up.  But maintaining so many small accounts is pretty expensive as many banks charge fees for maintaining accounts with low values. These accounts usually happen to be checking and savings accounts. CDs and brokerage accounts are the other type of accounts that people generally tend to pay up fee for.

Don’t Maintain More Than Two Accounts

One good way to save up on your money for retirement is to open just one or two accounts. You can have a single checking account and another, a high interest savings account. Instead of so many small accounts, these two accounts are enough to handle all the issues related to your routine and special expenditures for any given month. Even when you’d want to transfer money between different accounts, you’d have to pay a fee to the bank for availing the services.

Go for a Christmas Club Saving

Since we are all still in the holiday mood, the Christmas Club saving is something that is most appropriately discussed about during this time of the year. You open the account in January and maintain that account for the coming Christmas. If you touch it before that, you’ve got to pay up a penalty. This should work for saving up for your retirement too. Open an account for retirement and keep saving up money for that in a step-by step manner every month. This will help you build up security for your future. This type of saving reminds me of saving up money category-wise for different expenditures.

If you want to save up for retirement you could also adopt these strategies.

• Keep visiting the online website of the bank and operate your transactions from there. You really don’t have to pay a fee for many online transactions. Of course, if the usage of paper is mandatory, you might need to do it.
• Don’t use a savings account for more than 6 transactions. The transactions are of the type namely, wire, ATM, ACH transfer. If you make more than 6 transfers on your savings account you’ll be charged a high fee. You can always go for a checking account for that.

However, a month before he went to college, we planned to set up a checking account for him. We randomly picked up a bank and noticed that it offers excellent service in one category and poor in other. Same happened with the other pick. So, I and my son decided to jot down the list of services that would be quite helpful, convenient, and economical for Richard. That’s his name.

• Availability of ATMs in the university campuses so he can withdraw cash whenever he needs
• No additional fees for using the ATM
• To use the ATMs and for shopping, he would require a debit card (I found during the research that some banks offer cardless ATM transactions as well.)
• I don’t want Richard to use a credit card at this age and get into debts so early. So, a bank where credit card would not be issued to him without my request.
• Online banking facility. This would be convenient for him and help me to keep a watch on his spending.
• Electronic money transfer to send him funds whenever he is in urgent need of money.

My first need (ATM in the campus) filtered the results quite quickly. Only Bank of America had an ATM in Richard’s college campus. Though others were not available inside the campus, they were located pretty close and can be reached comfortably within no time. So I didn’t completely rule out the other option. However, I know how Richard is. When he needs money, he wants it right away. So, BOA had an edge over others.

Further research on the website informed me that they have this ‘CampusEdge Checking Account’ that was just perfect for my son. They have something known as “Stuff Happens” which offers a free refund for the first time. I know Richard would rarely make use of checks. Debit card is only what he needs.

After considering all the services offered by Bank of America, it was the best one that suited my son’s needs. That’s it. We set up a checking account for him.

As soon as we got the opening kit, I was informed that they would send me a text message on my mobile phone mentioning his balance every week. This is a good service. Whenever, I noticed that his account balance was under $300, I would immediately transfer few hundreds through Electronic funds transfer. Don’t I qualify to be nominated as the Best Father of the Decade? But nothing such happened. Maybe because I didn’t transfer money every week. However, the weekly updates helped me to know how he was managing his funds. Initially, I trained him on how to start budgeting, saving, and spending wisely.  Later on, he managed quite well. After all, he is my son.

He earned quite well this year in his summer job. So, there wasn’t any need to transfer money in his checking account. But I didn’t stop checking weekly text messages just to know what’s happening. Previously, I used to pay many of his expenses. However, last month we decided that he will take care of his own expenses hereon. Great going, Son!

He once requested Bank of America to issue him a credit card but they didn’t because I had instructed them strictly no to do so. I know there are some expenses he doesn’t want me to know. But not at this age my son.

He was doing well with budgeting and saving. However, I think we should have prepared him about this a bit earlier. This thought struck me when he called me up the day he received hi debit card and said, “Hey dad, how can I use this card at the gas station?” he has seen me doing this hundred times, but I didn’t bother to explain him in detail. I should have. Not only on how to use the card at a gas station, but everywhere else.

You might think why reward checking programs are gaining popularity with banks. This is because of the symbiotic benefits that can be achieved by the banks as well as the account holder in such a situation. The bank benefits doubly with people who hold reward accounts than with people who hold normal accounts. This is because people with reward accounts maintain higher bank balances than those with free checking accounts. For example, the ones with reward accounts hold a balance ranging from $3,900 to $ 13,000 whereas those with regular checking accounts might keep low balances to the tune of $750 to $ 1000. Also the reward account holders stay with the bank for a longer period of time in comparison to those who have a free checking account. Obviously when a person deposits higher amounts of money, he would be more serious about maintaining a relationship with the bank and is a more loyal client. Hence the reward accounts give the banks double profits than the regular accounts.

Reward accounts also attract the investors to open new accounts with the bank and also buy more products and services of the bank. A large number of reward accounts can also project the reliability of a bank to prospective clients who are contemplating the opening of an account with the bank. These days, even banking biggies offer about 0.12 % on current account and 0.23 % on savings account. A rewards account in a community bank offers you much more than that. Also rewards accounts beat the yields of Cash management and sweep accounts that are offered by brokerage companies which use cash management accounts. The brokerages these days are yielding as little as only 1% as they usually invest in market mutual funds which are subjected to market risks. Especially when the economic times are bad and uncertain, you cannot expect these broker accounts to yield more than 1 to 1.5 % on your accounts.

Reward yielding products do look good in comparison to a lot of options but they are not all that good when scanned for certain factors. Firstly, the 6 percent offer comes with a lot of conditions like debit card usage, direct deposits and signing up of electronic statements. If you don’t abide by these obligations your interest drops to as low as 0.1%. The maximum amount that can earn you a 6 % interest is limited by banks to a fixed amount, above which you get only 0.1 % interests. Most big banks don’t offer you reward checking accounts. Reward accounts are best for people with good banking schemes. The accounts should be insured.