Choosing a bank is a lot like choosing a significant other: you’d better have some chemistry, because you could be in for a long relationship. Here’s what to look for:

Stability.
Choose a reputable, FDIC-insured financial institution. The FDIC (Federal Deposit Insurance Corporation) backs your money up to $250,000 per insured bank.

Common ground.
Find a bank that specializes in the services you’re looking for. Own a small business? Find a bank known for small business help. Need a home loan? Choose a bank with mortgage experience. Want more personalized service? Choose a smaller, community bank.

Honesty.
Every bank has different fees. Make sure your bank is up front about the fees they charge for common services.

What are you getting out of it?
Look for higher interest rates for money that you deposit, lower interest rates on credit cards and loans.

Convenience.
Are ATM locations and bank hours more important to you or is mobile banking? Make sure your bank will be there when you need it.

Strong relationships.
Friendly customer service, online resources and personal relationships go a long way. Schedule a talk with a banker, get your questions answered and make sure it’s a good fit. After all, it’s your money.

What should I look for when choosing a bank?

Ask your bank about its fees and how to avoid them. Look for free checking and savings accounts. Sign up for automatic direct deposit of your paycheck and maintain a minimum balance in your account. Use only your bank’s ATMs. Also, sign up for overdraft protection, which turns your savings into a safety net for your checking.

A minimum balance usually requires that you keep a specified minimum amount in your account at ALL times or you will be assessed a fee. A minimum DAILY balance is more common, where you need to have a specified amount in the account by the END of the business day, even if the balance falls below that minimum during the day.

What's the difference between a minimum balance and minimum daily balance?

Getting a home loan isn’t a sprint, it’s a marathon. That’s why you need a trusted partner to walk you through the complex home-buying process. Talk with your prospective bank before you start looking for a home. An experienced lender will help you determine your budget based on your income, savings, existing financial obligations and financial history. Your bank will also review your available lending options, including new programs that offer additional flexibility based on your income. Learn more.

I'm ready to buy my first home. Where do I start?

Many lenders offer a “pre-approval” that gives you a conditional commitment in writing for a loan amount. This determines in advance the amount you qualify for and at what interest rate. To get pre-approved, you need to provide documents to your lender, like recent tax filings, proof of employment and your credit history. Pre-approval can often be given within a few days and may last for up to 3 months while you house hunt.

What is a pre-approval letter and how do I get one?

Take a deep, cleansing breath... there's a lot to prepare

Pay stubs, employer contact information and W-2 or 1099 tax forms (usually for the past 2 years) to verify employment

If self-employed, profit/loss information may be needed

Tax returns (usually your most recent two filings)

Your credit score and credit history will be verified

Complete bank statements showing deposits and debits

Proof of other income, including: pension, social security and disability payments, dividend earnings, bonuses, and child support or alimony payments

Proof of financial obligations, such as loans and credit cards, as well as any security accounts you may hold, like stocks, bonds and life insurance

Your completed and signed home purchase agreement and a copy of the earnest money deposit check, which is often provided with the initial home offer

What paperwork do I need when applying for a mortgage?

To finance your business, you’ll use self-funding, investors or loans.  It’s important to understand how much funding you’ll need. (Use this handy calculator to help.) According to the U.S. Small Business Administration (SBA), this will be one of the most important financial decisions you will make and can affect how you run your business. The SBA recommends developing a business plan, expense sheet and financial projections for at least 5 years.

Some banks, like Hawaii National Bank, are SBA Preferred Lenders, which helps them work more efficiently with the SBA to secure financing. SBA-guaranteed loans may be appropriate if you are not able to secure more traditional business loans. Start a conversation with a lender you are comfortable with who can help you through the process – sometimes it can be helpful to meet with more than one lender. Hawaii National Bank offers a range of business loans tailored to the needs of Hawaii businesses. Looking for inspiration? Hear from other Hawaii business leaders who worked with their banker to make their dreams a reality.

How do I get started with a loan for my business?

Your budget is your roadmap to reaching your financial goals. Online programs and apps like Mint.com make it easy to keep track of your spending and credit cards, set budgets, and keep your finances organized. Here are a few steps:

Define your income:
First, note your take-home pay. This is the basis for your budget.

Track your spending:
Track every dollar you spend for one month to find out where your money is going - you might be surprised. Make adjustments in your spending – and your lifestyle – accordingly.

Define spending and priorities:
Set aside money for housing and utilities (around 35 percent), savings (10 percent), and allocate the rest (45 percent) to things like food, clothing, vacations and entertainment.

Automatically contribute to savings:
A good rule of thumb is to set aside 10 percent of your earnings toward a general savings account (short-term), or an IRA or 401(k) (long-term).

Pay with cash:
Paying with a credit card can make it easy to overspend. Try to pay with cash after withdrawing a fixed amount each month. This helps you make better spending decisions and stay within your budget.

Pay down expensive debt:
Apply as much money as you can toward your most expensive debt. While it may be tempting to pay off smaller balances at lower interest rates, erasing debt with higher interest rates saves more money.

Everyone needs a safety net in case of a job loss, unexpected illness or surprise bills. Aim for setting aside 3-6 months of living expenses in an emergency fund that you can access without penalty, like an interest-bearing savings account.

First, create a monthly budget to help you keep track of your finances.  Once you have a good understanding of what you’re spending on each month, see where you can cut back. Cut back on discretionary spending or automatically deduct money from each paycheck to put into your savings account or retirement.

It’s never too early to learn good financial habits. The American Bankers Association (ABA) suggests making money lessons a part of your daily life. Bring your children to the bank to show them how transactions are done. At the supermarket, discuss “needs” and “wants,” and at home, assign chores and give them a monetary value. This helps children set and achieve financial goals. As your child grows, they may be ready for their own financial tools, like a debit card, to help them learn (with your oversight.) Check out these resources to start the conversation.

When should I talk to my kids about money?

Your credit score is a three-digit number used by lenders to help assess your financial history. Three major credit bureaus, Equifax, Experian and TransUnion, provide a score ranging from 300 to 850 that evaluates your likelihood to pay back debt. The higher the number, the better your “creditworthiness.” A high credit score means better access to loans, credit cards, and lower interest rates on major purchases, like cars and homes.

Your credit score is determined by your financial history. It takes into account your credit card debt, loans, late payments and other information, such as bankruptcies and foreclosures.

An easy comprehensive way to check your credit history is through your credit report. This report details your credit history, including timeliness of payments, new lines of credit opened, etc. Your credit report generally doesn’t include your credit score but you can request a free credit report every year at AnnualCreditReport.com and other sites. Beware of scams – don’t pay to see your credit report! Use your credit report to check for any errors or inconsistencies.

One of the best ways to build credit is by establishing a line of credit and paying off your balances on time. Having a solid track record of borrowing and paying off debt shows lenders that you are likely to do it again. Apply for a credit card that fits your needs, pay off those balances and watch your credit score grow.

How do I start building credit or increasing my credit score?

Credit cards build credit and give you increased financial flexibility, but not all credit cards are created equal. Here are some tips, according to the American Bankers Association (ABA):

Annual Percentage Rate (APR):
This interest rate is applied to your balance to calculate the interest you owe. The lower the APR, the better. Pay off your credit card each month before the due date to avoid interest charges. Paying only the minimum due may result in accumulated interest that will take longer to pay off.

Annual Percentage Yield (APY):
This is the interest rate if you carry a balance over a full year. The APY will be higher than your APR because of compounding interest.

Perks and rewards:
If you’re going to spend, you might as well earn while you’re at it.  Many credit cards offer perks and rewards just for spending, including travel benefits, gift cards and cash back. Find a reward card here.

Credit limit:
Your credit limit is the limit that you can spend on your credit card.  Your credit limit may increase over time as you establish good credit habits and your income grows.

Fees:
Fees include cash advance charges, late and returned payment penalties, or even annual credit card fees. Be sure to check card fees before applying.

Pay down your existing credit card balance before taking out a personal loan. Paying more than the minimum due each month, making a balance transfer to a lower-rate card, and working with your credit card issuer on a lower interest rate can help pay off your balance faster. If you do take out a personal loan, carefully examine the terms and interest rate and be sure you can handle the payments.

Should a personal loan be used to pay off a credit card balance?

According to the American Bankers Association (ABA), identity theft is one of the fastest-growing crimes in the U.S., with identity fraud losses estimated at nearly $17 billion in 2019. There are several basics to follow to help protect yourself, including the use of Online Banking to monitor your accounts, as well as ordering a free copy of your credit report every four months at annualcreditreport.com. If you think you may already be a victim, immediately call your bank and credit card issuers so they can close your accounts, the ABA says, then place a fraud alert on your credit report by contacting the three credit reporting agencies. You can also report the fraud to the police and the Federal Trade Commission.

What should I do if I am a victim of identity theft?

Digital security is more important than ever – that’s why it is important to use secure banking services and protect yourself against scams. The American Bankers Association (ABA) suggests that you check your computer’s virus protection software to ensure that it is up to date and use caution with websites that are not secure (look for the “s” after the “http” in the website’s URL). Double check any downloads or links you receive to be sure they are from a trusted source. Also, use a passcode on your smartphone and other mobile devices, and remember to change them periodically.

Retirement may seem like a long time away, but it’s important that you start saving now. This is a long-term commitment and the earlier you start, the better. A rule of thumb is that you may need at least 70 percent of your pre-retirement income to maintain your standard of living when you’re retired. So start here.

When should I start saving for retirement?

401(k) plan:
Find out if your employer offers a 401(k) plan and take advantage of it. Automatic deductions help you set aside funds that are invested pre-tax. Some employees even match contributions.

Pension plan:
In a pension plan, employers set aside funds for investment that go towards a worker’s retirement. Find out how your pension plan works, especially if you plan to change jobs or have a spouse.

Individual retirement account (IRA):
An IRA allows you to invest pre-tax income for retirement. You can put up to $6,000 a year into either a traditional IRA or a Roth IRA.  The type you choose determines the tax treatment of your contributions and withdrawals. Learn more about IRAs.

What are my options when saving for retirement?

Your employer may offer a program that matches 401(k) contributions up to a specified amount, which allows you to save even more. The earlier you start, the more you benefit from compound interest over time. Plans have different requirements and benefits, so be sure to talk to your employer.

Generally, it’s better to pay down debt with the highest interest rates, like credit cards. Other debt, like student loans and mortgages, often have tax-deductible interest and lower interest rates. With these lower rates, it may make sense for you to start saving in addition to making your monthly payments.

Should I focus on paying off my existing debt or contributing to my retirement?

Compound interest is a critical part of saving. When you set aside funds in a savings account, you collect interest, and the money you earn from that interest also earns interest. This snowballs over time into a larger amount. So, as a general rule, the earlier you start saving in an interest-bearing account, like a 401(k) or IRA, the more you make over time. So start saving now. Even a little bit can grow into a lot.

What is compound interest, and how does it impact my retirement?

Because of compound interest, it’s best to start saving now, no matter what the amount. You’ll thank your younger self when you’re drinking an umbrella drink on Kaimana Beach at 65.

Is it better to start saving a little money now, or more money later?

Compound interest is a critical part of saving. When you set aside funds in a savings account, you collect interest, and the money you earn from that interest also earns interest. This snowballs over time into a larger amount. So, as a general rule, the earlier you start saving in an interest-bearing account, the more you make over time. So start saving now. Even a little bit can grow into a lot.

CDs are a low-risk way to earn a higher interest rate than a savings or checking account. Offered by banks, you can put funds into a CD for a specified length of time at a pre-determined interest rate. You are guaranteed those funds back, plus the interest earnings. There are several types of CDs, with terms as short as 1 month, so talk with your bank to determine the best option for you. Learn more about CDs.

A Money Market Account generally offers a higher interest rate on your funds than a typical savings account, but with greater minimum deposit and balance requirements.

Liquid assets include cash (like a savings account) and things like stocks and bonds that can easily be converted to cash. Usually accounts that are easily accessible have lower interest rates, but offer the flexibility to withdraw funds quickly without penalty. Ideally, when building an emergency savings fund to cover unexpected expenses, you should put your money into liquid accounts.j

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