Finding the Best Bank for Your Needs

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Finding the Best Bank for Your Needs
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By Kimberly Palmer

Savings and checking accounts come in more sizes and shapes than jeans -- and you want to make sure you find the right fit. We spoke with some of the top banking and money experts to get the latest on how to be savvy when choosing a bank account. Here are six of their top tips:

Know your options -- and yourself. In general, says Today Show financial editor Jean Chatzky, larger banks offer more ATMs and lower interest rates on savings accounts, while smaller banks might be less convenient but offer lower fees. Meanwhile, online-only banks might be able to offer higher interest rates, but lack the brick-and-mortar presence, and credit unions often offer lower fees but can have more restrictions such as when you can speak to a customer service representative or visit a teller.

"The question you have to ask as a consumer, is, 'How do I use my bank?' " Chatzky says. For example: "Do I care if there's a teller? Do I want to be able to walk in and talk to somebody? How often will I use an ATM, and do I care if there's not one where I live and one where I work?" She recommends the comparison tool findabetterbank.com, which makes it easy to search by ZIP code. Other websites, including bankrate.com and Google Advisor, also offer free customized searches.

Focus on your checking account first. "Your checking account is the centerpiece," says Greg McBride, senior financial analyst at bankrate.com. "You can always have a savings account elsewhere, and then link it to your checking account."

Free checking accounts are still relatively easy to find, %VIRTUAL-article-sponsoredlinks%although most banks will charge for extra products and services such as a safety deposit box, bounced checks and withdrawals outside its ATM network. "If you find a free checking account, the only way it will cost you money is if you have sloppy financial habits," McBride says.

Keep your eyes peeled for letters from your bank. That's how banks let you know about any changes to their policies that will affect your accounts, says "The 10 Commandments of Money" author Liz Pulliam Weston. "Those can be easy to miss, though, so it's not a bad idea to simply call your bank and ask if any new fees are about to apply to your accounts," she says. If new fees are avoidable, such as a charge imposed if your account drops below a minimum balance, perhaps you can put more money into your account or close it altogether.

Don't forget about credit unions. "They are truly local, unlike so many of the other 'too big to fail' banks, and are deeply invested in the communities they serve," says Jude Boudreaux, a certified financial planner in New Orleans.

Consider your travel schedule. If you travel a lot for work and need a bank with branches throughout the country, you probably want to skip the local community bank and go with a big one, even if it means incurring a few more fees, says Farnoosh Torabi, author of "Psych Yourself Rich." On the other hand, if you don't rely much on ATMs, and the local teller can fill all your needs, a local bank or credit union could work better for you. "The bank's customer service may be unavailable after business hours, but in exchange you may face lower fees," she says.

Stay on top of your own account. When special education teacher Danny Kofke, author of "A Simple Book of Financial Wisdom," got hit with a late fee on a credit card payment, he immediately called his bank, a national chain, and explained that he accidentally forgot to pay the bill. The customer service representative immediately agreed to waive the fee, partly because Kofke is a good customer with a strong history of on-time payments and multiple accounts with the bank. "I know I could probably shop around and get better rewards on my credit card, but since we don't have any debt except our mortgage, I find just working with one bank much easier to keep track of," he says.

Chatzky adds that people who bank online tend to look at their accounts four times more often than those who bank the old-fashioned way, and frequent check-ins can help spot any potential identify theft as well as prevent overdrawing an account.

The bottom line: Your banking needs are unique, so take time to think about what's most important to you, then find the bank that offers it. You can probably avoid paying most fees, as long as you stay on top of your account.


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Why Your Bank Thinks Someone Stole Your Credit Card
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Finding the Best Bank for Your Needs

One reason why Marquis' gas purchases might have triggered a fraud lockdown? Filling their tank is a common first move for credit card thieves.

"Some of the things they look at are small-dollar transactions at gas stations, followed by an attempt to make a larger purchase," explains Adam Levin of Identity Theft 911.

The idea is that thieves want to confirm that the card actually works before going on a buying spree, so they'll make a small purchase that wouldn't catch the attention of the cardholder. Popular methods include buying gas or making a small donation to charity, so banks have started scrutinizing those transactions.

Of course, it's not a simple matter of buying gas or giving to charity -- if those tasks triggered alerts constantly, no one would do either with a credit card. But Levin points to another possible explanation: Purchases made in a high-crime area are going to be held to a higher standard by the bank.

"It's almost a form of redlining," he says. "If there are certain [neighborhoods] where they've experienced an enormous amount of fraud, then anytime they see a transaction in the neighborhood, it sends an alert."

(Indeed, Erin tells me that one of the gas purchases that triggered an alert took place in a rough part of Detroit, which she visited specifically for the cheap gas.)

People who steal credit cards and credit card numbers usually aren't doing it so they can outfit their home with electronics and appliances. They don't want the actual products they're fraudulently buying; they're just in it to make money. So banks are always on the lookout for purchases of items that can easily be re-sold.

"Anytime a product can be turned around quickly for cash value, those are going to be the items that you would probably assume that, if you were a thief, you would want to get to first," says Karisse Hendrick of the Merchant Risk Council, which helps online merchants cut down on fraud. Levin says electronics are common choices for fraudsters, as are precious metals and jewelry.

Many thieves don't want to go through the rigmarole of buying laptops and jewelry, then selling them online or at pawnshops. They'd much prefer to just turn your stolen card directly into cold, hard cash.

There are a few ways that they can do that, and all of them will raise red flags at your bank or credit union. Using a credit card to buy a pricey gift card or load a bunch of money on a prepaid debit card is a fast way to attract the suspicions of your credit card issuer. Levin adds that some identity thieves also use stolen or cloned credit cards to buy chips at a casino, which they can then cash out (or, if they're feeling lucky, gamble away).
 

When assessing whether a purchase might be fraudulent, banks aren't just looking at what you bought and where you bought it. They're also asking if it's something you usually buy.

"The issuers know the buying patterns of a cardholder," says Hendrick. "They know the typical dollar amount of transaction and the type of purchase they put on a credit card."

Your bank sees a fairly high percentage of your purchases, so it knows if one is out of character for you. A thrifty individual who suddenly drops $500 on designer clothes should expect to get a call -- or have to make one when the bank flags the transaction. If you rarely travel and your card is suddenly used to purchase a flight to Europe, that's going to raise some red flags.

Speaking of Europe, the other big factor in banks' risk equations is whether you're making a purchase in a new area. I bought a computer just days after moving from Boston to New York, and had to confirm to the bank that I was indeed trying to make the purchase. Levin likewise says that making purchases in two different cities over a short period of time raises suspicions.

"I go from New York to California a lot, and invariably someone will call me [from the bank], " he says. Since one person can't go shopping in New York and California at the same time, any time a bank sees multiple purchases in multiple locations in a short period, it's going to be suspicious.

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