In a Nutshell
To find a bank that provides what you want, evaluate what they have to offer and whether it aligns with your current needs as well as your future goals.To choose a bank that’s right for you, consider your current financial situation, your existing banking habits and your future needs.
Then look for a financial institution that can provide the account types, products, services and additional features you want most.
Or you might decide that you’re better off with more than one bank. Having relationships with more than one institution offers you greater flexibility for managing your money, while gaining access to a wider range of products, lower fees and better rates.
Whatever you choose, here are a few things to consider before you make your decision.
- Traditional vs. online vs. credit union
- FDIC or NCUA insurance
- Product and service offerings
- Interest rates
- Account and service fees
- Branch and ATM locations
- Online and mobile banking
Traditional vs. online vs. credit union
There are three main types of personal banking institutions to choose from. The type that’s right for you depends on the products and services you need, how you prefer to access your money and the level of customer service you desire.
Traditional banks
Traditional banks provide financial products and services to customers primarily through a network of brick-and-mortar branches. Larger banks tend to offer a wider range of products and services and more branch and ATM locations than smaller banks, online banks and credit unions.
If you like banking in person and want broad access to a local branch and its resources when you have a question or problem, a traditional bank might be the way to go.
If service from a human being isn’t important to you or you prefer a smaller community feel, an online bank or a credit union may be a better choice.
Online banks
Online banks offer products similar to traditional banks but have few or no branches. Because they have less overhead than traditional banks, their fees and interest rates are often more competitive. But while online banks have customer service representatives to assist you, you won’t be able to walk into a branch if you have a problem.
Credit unions
Credit unions are nonprofit member-owned organizations that provide financial products and services to their members. Since credit unions are member owned, profits are returned to members in the form of lower fees and rates on loans and higher interest on checking and savings accounts. Members must meet certain criteria, which are often based on where they live or work, or what organizations they belong to.
If you want to establish a relationship with an organization that has ties to your community, you might want to check out your local credit unions. You’ll get “much more of an intimate relationship,” says Jason Reposa, co-founder of MyBankTracker.
And because of that relationship, your local credit union may be more willing to work with you than a larger bank would.
One thing to keep in mind is that credit unions (and smaller community banks) may not offer the advanced features, like mobile banking or bill pay, that larger banks or online banks might offer.
FDIC or NCUA insurance
You work hard for your money, so make sure it’s protected. Choose a bank insured by the Federal Deposit Insurance Corporation or a credit union insured by the National Credit Union Administration. The FDIC and NCUA insure your money up to at least $250,000 per depositor, so if your financial institution fails but is insured, you’ll be covered.
Product and service offerings
If your needs go beyond setting up a checking and savings account to pay your bills and save for a rainy day, take a close look at the other products and services your bank offers.
Many banks and credit unions offer basic loan products, including mortgages, credit cards and personal loans. They may also have services to help you manage financial transactions like certified checks, cashier’s checks and automatic bill pay.
But if you need more-sophisticated offerings, such as wealth-management and financial-planning services, you may have to dig a little deeper to find them.
If you’re looking to keep all your accounts under one roof, a large national bank is probably the way to go, says Reposa. But if you don’t mind having accounts at multiple institutions, you may find better fee structures and interest rates by establishing relationships with more than one bank or credit union.
Interest rates
Interest rates are important for two reasons. Paying less interest on your loans and earning more interest on your savings puts more money in your pocket to help you achieve your financial goals. But interest rates vary from institution to institution. So consider shopping around to find the best rates.
Account and service fees
Many financial institutions charge fees for the products and services they provide. But just like interest rates, fees can vary widely. And many institutions may waive or lower them if you meet certain criteria, such as maintaining a minimum balance requirement or setting up direct deposit.
To avoid being blindsided by fees, find out what your bank charges for the products and services you use the most before you open a new account. Common charges include …
- Monthly maintenance fees
- Overdraft fees
- Statement fees
- Stop payment fees
- Returned check fees
- Wire transfer fees
- Cashier’s check fees
- Certified check fees
- Out of-network ATM fees
Branch and ATM locations
If you prefer to do your banking in person, your bank’s branch locations will be an important consideration. Check to see if the bank or credit union you’re interested in has locations near your home or office to make banking more convenient for you. If you travel frequently, you may also want to consider whether there are branches in the cities you visit most.
And even if you don’t typically bank in person, find out where the bank’s ATMs are located. Don’t forget to see if there’s a fee for using an ATM that’s not in the branch’s network.
Online and mobile banking
If making a trip to your local branch isn’t for you, see what technology your financial institution has available that will allow you to bank from home or on the road. Check out their online, mobile banking and remote check deposit capabilities, as well as any apps they have that could make your banking experience more convenient and your life easier.
With concerns about the safety of online accounts increasing, you may want to look for a bank or credit union that has two-factor authentication, which provides an added layer of security to your banking transactions.
What’s next?
There are a variety of factors to consider when choosing the bank that’s right for you, including locations, product and service availability, fees, interest rates and much more.
Decide which ones are most important to you and look for banks or credit unions that provide them. To simplify your search, Reposa recommends checking out a comparison website that allows you to enter the features you’re looking for and then generates a list of banks and credit unions that match.