Jitasa Nonprofit Blog

Choosing a Bank Account

Choosing a bank account can have long term impacts on your organization. To help you choose wisely, we've addressed some things you should consider before committing to an institution. 

Once you receive youremployer identification number (EIN) your next step is to open up a bank account for your organization. While it may seem straightforward, you shouldn’t pick the first institution you come across. Instead do your research to ensure you are choosing the bank account that best suits your needs. 

Begin by thinking long term about where you want your organization to go and what services you will require from your bank. 

Bank location

  • Do you require face to face customer service?
  • Is it important for you to easily make a deposit or ask a question? 
  • Do you need multiple locations? 
Fees 

What fees are you willing to pay? Research where a bank stands on overdraft, ATM, transfer, and maintenance fees in advance by asking the following questions:

Are there monthly maintenance fees? 
  • Some institutions charge a fee simply for having an account with them (Service fees, maintenance fees).
Are there check writing fees? 
  • Is there a maximum amount of checks your bank will allow you to write?
  • For example, can you only write 10 checks before you are charged a processing fee? 
Is online bill pay free?
  • What is the fee if it is not?
  • If you pay a bill through the bank will the funds be removed from your account right away? Or will the funds remain in your account until the payee cashes their check?
What is the Overdraft Protection policy? 
  • Will you incur fees if your account becomes overdrawn?
  • Will the money be loaned from the bank?
  • What will the payment requirements be?
  • Will the money come from your checking account?
Account requirements

Is there a minimum amount to open an account? 
  • How much money will you be required to provide upfront? Is this in your budget?
Are there monthly deposit requirements? 
  • Will you be required to deposit a minimum amount each month?
  • For example, a savings account that is attached to a checking account will often require a transfer of a minimum amount each month. 
Is there a minimum balance that must be on the account? 
  • Will you be required to maintain a minimum balance in your account?
  • What will the fine/fees be if you do not?
Account technology
 What technology do they offer their customers?
  • Is there a way to sign up for email/text notifications?
  • Do they have an app for smart phone users?
  • Can you view your account information online? From your phone?
  • Can you deposit checks from your phone?
  • Can you make account transfers online? From your phone?
Considering these situations prior to committing to a bank account will limit any surprises from a banking institution in the future, while allowing your organization to grow. 

Note: Some institutions offer special checking accounts for nonprofit organizations…however that isn’t a guarantee that it will be a better fit for your organization. The fees may be different, and a standard checking account may benefit you more. Don’t forget to look into local credit unions and online banks which can also offer customized services.  
 
Extra Credit 
 
Nonprofit Central has a short white paper that offers helpful tips like, “Don’t be dazzled by interest rates.” 
 
Find it here: https://nonprofitcentral.biz/documents/How_to_Choose_a_Bank-1.pdf

Find the Best offers a comparison of 543 banking institutions. They issue a “smart rating” to each institution, “the Smart Rating is an unbiased scoring of the accounts features and other metrics, including: 
  • Interest rate
  • Minimum balance (to open) 
  • Monthly fee
The features include: 
  • Online banking
  • Account alerts
  • Mobile banking
  • Free checks
It then assigns a weighted value to each variable, averages the scores, and produces an overall rating of the account.” They also allow you to compare your favorites side by side by checking a simple box. 

Find their tool here: http://checking-account.findthebest.com/ 
 
Renata Poe Massie, Content Writer for Jitasa
 
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