With so many options available, identifying the financial institution that will best meet your needs can be a challenge. As you begin your search, keep one thing in mind: The bank you end up choosing should suit your financial situation.
In fact, it may be best to have a relationship with multiple banks in order to meet all of your banking needs. “I think in this day and age, I don’t think you’re going to find a one-size-fits-all,” says Charles Sachs, certified financial planner and chief investment officer at Kaufman Rossin Wealth, a financial planning firm. He says instead you may want to bank with a couple of institutions with different attributes.
Not all banks are created equal. Each offers different types of accounts, services, interest rates, fees and more. Whether you’re moving, heading to college or considering switching banks – and starting fresh with a new one – follow these steps to choose a right bank for you:
- Understand the different types of bank accounts.
- Consider the banking experience you want.
- Do your research.
Keep reading for additional information on each step in choosing a bank.
Understand the Different Types of Bank Accounts
Banks offer a variety of account types and services. Understand the different account types banks offer and identify which ones you’re looking to open.
Checking Accounts
Checking accounts can be used for cash deposits and withdrawals, paying bills and other everyday transactions. Typically when opening a checking account, you’ll receive a debit card and access to online banking services.
Savings Accounts
Earn interest on your money in a savings account to reach short-term financial goals. Savings accounts earn interest, compared to checking accounts which usually don’t. However, withdrawal limits on some accounts can make it more difficult to readily access your funds.
Money Market Accounts
A combination of both a savings and checking account, money market accounts typically offer higher interest rates than regular savings accounts and provide linked bank debit cards, but require a higher minimum deposit.
Certificates of Deposit
Frequently offering the highest interest rates of any type of account, certificates of deposit lock your money in for a set period of time. During this time your money is accumulating interest and you can take it out at the end of the term. Due to early withdrawal penalty fees, CDs are best for long-term financial goals.
Consider What Banking Experience You Want
Just as different bank account types offer unique features, different types of banks do as well. An online bank may offer you a savings account with a higher annual percentage yield, but won’t always provide the same level of individual care as your community bank might.
Examine the chart below breaking down the pros and cons of each type of bank to better understand what matters most to you.
| Institution Type | Pros | Cons |
| National Banks |
Typically offer a wider breadth of services in comparison to other financial institutions. ATM and branch locations all across the country. |
Typically do not have a community-first vision. May have more and higher fees in comparison to a regional or community bank. |
| Regional/Community Banks |
Lend money back to the community. Local banks tend to only thrive when their customers and community do. Bank employees build relationships with their customers. |
May lack the breadth of services in comparison to national banks. A small number of ATMs and branch locations. |
| Online Banks |
May have a more robust mobile app. Could potentially have higher interest rates and no fees. |
No physical locations. ATM access varies based on your online bank. Some are not banks, but rather financial technology companies. |
| Credit Unions |
Most consumers are eligible to join. Offer higher interest rates on savings and lower rates on loans compared to banks, on average. Great source for financial education. |
Similar to regional or community banks, credit unions may lack the breadth of services and physical locations compared to national banks. |
Do Your Research
Now that you’ve narrowed down which account features you need and which type of bank best fits those needs, it’s time to research your options. Consider the following factors before making your final decision.
Interest Rates and Fees
Remember, not all banks are created equal. Each bank has its own set of fees and interest rates associated with the accounts it offers. Type the name of the bank followed by “schedule of fees” and find the fees associated with the accounts you are interested in opening.
Keep in mind that rates and fees are always subject to change at a given bank. “The benefits and even interest rates, they’re gonna fluctuate over time,” says Harrison Hinz, a financial advisor at First Pacific Financial. “One bank might be winning now, or have a better offer now, but they all cycle through and each one has their own time in which they outperform others.”
Confirm FDIC or NCUA Insurance
Possibly the most important thing when choosing a bank is making sure it is either FDIC or NCUA insured. The FDIC insures bank customers up to $250,000 in deposits in the off-chance the bank fails.
The NCUA offers the same protection for credit unions, with each member having $250,000 in total coverage per credit union.
Read Reviews
Once you’ve narrowed your options down to a few choices, read reviews from experts and customers alike to get a better understanding of the financial institution. If you are just looking at its website, you will only be seeing things the bank wants you to. Like any other product, reviews give you the perspective of someone who has already used it.