Question

Answer one of the three questions please.

1. Assume you are moving to a new city to start your first job. How would you decide which bank in which to open your personal account? Your employer will be depositing your paycheck directly into your account every payday.
2. In light of today’s financial environment, how do you think interest rates on savings accounts affect a person’s overall financial plan?
3. When selecting financial institution, how important is deposit insurance? Would you forgo an insured deposit in favor of a savings alternative that paid higher interest? Why or why not?

Answer 1

In today's world selecting a bank account is extremely important given the financial crisis, and the instability in the financial services sector.

One of the keys factors to be considered while selecting a bank is

1. Understand the type of loans the banks has given in last few years. For eg. In case the banks frequently lends to stressed sectors such as real estate, NBFC etc it can be seen as a red flag

2. In case the banks gives higher savings deposit rate it is not necessary a good thing always. The bank could be in financial crunch and needs more deposits in oder to sustain itself

3. Always go for known banks such as CITI bank, Standard chartered bank etc. The reason being we have past performance to compare and we can assume the same in near future.

4. In case the bank is listed, we will find lot of information from such as recent News, financial updates, broker reports. We can get a fair idea of the Bank. Always go for the bank which is financially stable.