Choosing a Financial Institution

Most employers these days pay by digital deposit (sometimes known as direct deposit). Where is your employer depositing your wages? A traditional bank? Credit union? Online-only financial institution? Online offshoot of an established brick-and-mortar establishment? Or perhaps an independent company such as PayPal or

There are a lot of options to choose from, so how do you choose which is best for you? By not only knowing what you need now, but by also calculating what you might need in the future.

Some online-only financial institutions offer incentives such as early payroll direct deposit with certain employers and no basic account fees, which helps if all you want are personal checking and savings accounts. They also have no overdraft fees, but they can limit how far you can be overdrawn before they’ll deny the transaction. Independents such as PayPal will pay your bills at no charge, but they take a percentage of what you’re paid.

Online offshoots of established financial institutions offer lower fees than their parent institutions, but they also tend to offer fewer services than their brick-and-mortar counterparts. Check the fine print for the differences to see whether it’s a good fit. How to choose an online bank.

Whatever option you choose, do your homework first. If you’re starting a new business, you might save money with one of the online options – but what if you anticipate a cash-flow problem? Will the financial institution work with you on it?

One of the most important things to consider is whether you might need a personal relationship with your financial institution in the future. If you don’t think you will, then a technology-based, impersonal financial institution may serve you well. But should you experience a financial crisis, such as loss of job, health care emergency, or natural disaster, having a personal relationship can make the difference between having your institution work with you and “transaction denied.”

There are ways to avoid additional fees, no matter what kind of financial institution you choose.

Ways to avoid additional fees

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