Your bank should fit your money needs. Not every banking institution has the same fees, interest rates, services or even types of accounts, so it’s helpful to compare the details that matter to you. Here are steps for choosing a bank. Show
1. Understand the types of bank accountsA bank is like a buffet: It has a lot to offer, but you don’t need everything. Start by considering your banking needs. Banks provide accounts for managing and saving money as well as credit cards and loans such as mortgages. Here’s a look at the two most common bank accounts:
Beyond that, there are two other types of savings accounts:
If your banking isn’t just for you, ask yourself these questions:
Remember that you don’t have to stick to one bank for all your accounts, or decide to have just one of the same account type. Having multiple savings accounts at different banks, for example, could be strategic if you use them for different reasons and can avoid fees. SoFi Checking and Savings Marcus by Goldman Sachs Online Savings Account Discover Bank Online Savings 2. Know what banking experience you wantBanks come in different sizes and structures. A bank down the street, a bank exclusively online, a not-for-profit organization and a tech company with a mobile app can all be a home for your money needs. But they’re not all built the same or prioritize the same aspects of banking, so compare their strengths and shortcomings. Here’s a list of the broad types of banking institutions:
National banksSize has its perks. These banks have the widest range of accounts and loans, along with generally high-quality mobile apps and websites. Most national banks are brick-and-mortar institutions, as opposed to online-only, so in-person needs can be met through their ATM and branch networks across many states. But checking and savings accounts have drawbacks: There can be monthly fees if you don’t maintain a minimum balance, savings rates are some of the lowest, and overdraft fees can be high. (See the largest U.S. banks.) Regional and community banksThese banks are smaller than national banks and tend to focus on specific geographic areas where they have branches and ATMs. They’re generally recognized for relationship-based banking, especially for mortgages and small-business loans. A fair number of these banks (along with credit unions) are community development financial institutions, or CDFIs, which are certified in their missions to focus on serving low-income communities. Regional and community banks may lack the latest technology for online or mobile banking. Credit unionsThese not-for-profit equivalents to banks emphasize personalized support and higher savings rates, on average, than traditional banks. Credit unions have membership requirements; some are easy to join through a one-time donation to a nonprofit while others require you to live or work in a specific region. Like community banks, they may fall short on having the latest tech. (See the best credit unions.) Online banksInternet-based banks tend to have the highest rates for savings and CDs, and no monthly fees. Most have solid mobile app experiences. But online banks don’t have everything: Most have no branches or cash-depositing ATMs, and you won’t find all types of accounts or services, such as international wire transfers or cashier’s checks. Some online banks have only savings accounts and no checking, or vice versa. (See the best online banks.) NeobanksNeobanks are a relatively new type of institution and most of them are not banks themselves. Instead, they’re financial technology companies that partner with banks to offer mobile-first (and sometimes mobile-only) banking accounts with deposit insurance. Most of them focus on checking accounts, some of which also have savings features, and still others have loans or credit-building tools. Like online banks, they don’t have branches, and many lack specialty banking services such as wire transfers and cashier’s checks. Neobanks can have certain tech features that other institutions often don’t, such as early access to direct deposits. (See 19 neobanks’ offerings.) 3. Pick your must-have featuresYou likely won’t find the best of everything at one institution. For example, it’s rare to see an online bank with branches, a national bank with competitive savings rates, or a credit union with the latest mobile app technology. To set expectations, consider what features or services you can’t do without. Here’s an overview of general patterns across types of banking institutions:
Click on any feature or service to jump to that section below: Wide range of accountsWhere to look: National or regional bank. If you want your bank to be a one-stop shop for all financial needs and services, including business banking, a national or regional bank might be the way to go. But choosing this convenience may mean missing out on the highest savings rates or the lowest fees, among other things. Low checking feesWhere to look: Online bank, credit union or neobank. These institutions generally offer checking accounts with low to no monthly maintenance fees, no minimum balance requirements and no overdraft fees — which can cost $35 at a national bank. Overdraft fees are among the most expensive fees a checking account holder can pay. High savings and CD ratesWhere to look: Online bank or credit union. Since online banks don’t maintain branches, they have lower overhead costs and can use some of that savings toward higher rates on regular savings accounts, CDs and money market accounts than you can find elsewhere. Rates are usually stated in terms of annual percentage yields. As not-for-profits, credit unions give back to their members in the form of certain benefits including higher APYs than average compared with traditional banks. Some credit unions have rates competitive with online banks. Branches near youWhere to look: Varies. If you know you’ll need branch access regularly, decide what’s the farthest distance you’d be willing to travel and narrow down from there. Will you need to find a branch while traveling out of state? You can find banks and credit unions in urban and rural areas. National banks generally have huge networks in major cities nationwide. Sometimes smaller institutions are the only physical banking presence in a rural community. Credit unions aren’t known for big branch networks individually, but more than 1,800 credit unions are part of the CO-OP Shared Branch network, meaning you can conduct certain transactions at any branch within the nationwide network. Big fee-free ATM networkWhere to look: Most institutions, but breadth of ATM services varies. Most types of banking institutions offer free access to national ATM networks, but the number of ATMs is not the only thing to compare.
Specialty banking servicesWhere to look: Bank or credit union with branches. You might end up needing banking services that are mainly available at brick-and-mortar banks and credit unions. If your main concern is depositing cash, there are ways to deposit cash at an online bank. Beyond that, landlords, wedding vendors, home repair contractors and others might take only paper checks, cashier’s checks or other physical payment that aren’t always options at online banks. Or you might need to use a specialty service such as an international wire transfer or safe deposit box. (Learn more about whether you can give up a branch-based bank.) Special perks: Cash back or budgeting toolsWhere to look: Neobanks. If you are a digital native or otherwise comfortable doing your finances almost entirely on the web, neobanks can be a solid option for low to no-cost banking with perks. Many neobanks offer two-day early access to direct deposits, and some have subaccounts for multiple savings goals or accounts for building credit. Mobile appsWhere to look: National banks, online banks or neobanks. Check the Google Play and Apple App stores for Android and iOS bank apps, respectively. These can be helpful third-party sources for star ratings and reviews from a bank’s customers, and to see how they react to the apps, plus visuals and descriptions of the features. If you see fewer than 20 ratings and the institution has been around for a while, it’s probably safe to say that the bank is not prioritizing its apps. Community banks and credit unions may not have the most up-to-date technology on mobile apps. Community-focused supportWhere to look: Credit unions and community banks. Credit union memberships can be restrictive, but they can provide a way for a credit union to focus on people in a certain region or with a certain type of employer (such as teachers or military personnel). Community banks are generally small enough that they know a particular region well and, like credit unions, can foster closer relationships with residents than a national bank can. Black-owned banks and other minority-owned banks and credit unions address racial inequities in America through more inclusive lending practices. (There are a handful of community-focused neobanks too.) Social responsibilityWhere to look: CDFIs and others. Some banks and credit unions seek to create a positive impact for people and the planet in how they lend and support communities through environmental, social and governance factors. (Learn more about ESG criteria.) Socially responsible banks generally go the extra mile to get a third-party certification, such as Certified B Corporation banks for rigorous social and environmental accountability, members of the Global Alliance for Banking on Values, and CDFIs, which focus on helping low-income communities. Minority-owned banks, in particular, create social impact by providing more mortgages and other loans to people of color than the banking industry does overall. Banking safetyWhere to look: Most institutions.
4. Compare similar optionsOnce you know your must-haves, start building a list of institutions that fit what you’re looking for. Look at reviews of banks, credit unions or neobanks to get a close look at the pros and cons of each one. See a list of dozens of bank and credit union reviews. If you have bank accounts already, the process of switching banks can have some hurdles, but it can be rewarding, especially to take advantage of better rates or lower fees. If you’re focused on high rates and low fees, you might begin your comparisons by looking at the best. Here are some places to get started: For banks overall: For savings accounts: For checking accounts: For CDs: For other banking accounts: What are the important things to consider when choosing a bank or credit union?8 steps to choose a new bank. Identify the right account. ... . Look for banks that charge low or no fees. ... . Consider the convenience of a bank branch. ... . Take a look at credit unions. ... . Find a bank that supports your lifestyle. ... . Examine digital features. ... . Understand the terms and conditions. ... . Read reviews for banks you're considering.. What are the important things to consider when choosing a bank or credit union quizlet? Convenience.. Fees.. Interest rates.. Deposit insurance.. What should you consider when choosing a bank and account type?Insurance. You should verify that the bank or credit union where you open an account provides insurance from either the Federal Deposit Insurance Corporation (FDIC) or National Credit Union Administration (NCUA). ... . Minimum balance requirements. ... . Fees. ... . ATM network. ... . Interest and rewards. ... . Mobile app features.. |