Maybe you flip a coin. Or you play rock, paper, scissors. All banks offer pretty much the same features, so it doesn’t matter which one you choose, right?
Hang on! Not every bank is created equal. It’s time to do your homework to find the one that’s right for you. It’s the only way you’ll avoid paying out the wazoo in fees, charges and other costs that drain money out of your wallet.
The two things you really need to narrow down when choosing a bank are 1) what kind of bank you want, and 2) the features that matter the most to you. Here’s what to look for.
1. Account Types Offered
You’re going to need a checking account for your regular spending and banking (of course). And you’ll need a savings account for those unexpected emergencies. But you may also want the option to put money in a money market account that offers different features. Some banks also offer interest-earning checking accounts or rewards checking accounts. If you do a little homework, you can find out which banks will give you the best rates.
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When it comes to the actual place where you’ll park your money, you have three basic options:
- Traditional Bank. You’ve seen these on the corner of every big city and small town in America. With a traditional bank, you can choose a big, national bank or a smaller, community option. Honestly, there’s no upside to the massive name-brand bank unless you enjoy being treated like a nameless, faceless account number. On the other hand, a smaller community bank will often give you great customer service, and you get to know the people who are handling your money. What a concept!
- Credit Union. These are like traditional banks with a few differences. Credit unions usually have fewer branches and ATMs, but they typically have fewer fees and higher interest rates on your money (and that’s good for your bottom line). Credit unions require membership based on certain criteria, like being a teacher or serving in the military.
- Online Bank. This is the new kid on the block. With these options, everything happens digitally—deposits, transfers, bill payments and savings. You can’t talk to the branch manager because there isn’t one. There is little human interaction with online banking.
2. Interest Rates
This is the interest you earn in checking, savings, CDs and money market accounts. We’re not talking big numbers here, but you still need to do the research. Banks and credit unions usually advertise these online. You can weed out the ones with the lower rates. Online banks often offer better rates because they don’t carry the costs of having a brick-and-mortar bank in every town .
Lots of banks will use special interest rates or introductory offers to get new customers, but those rates may not last forever, so read the fine print (even if it’s too small for a mouse to see).
These can bleed you dry, so find out the amount banks charge in ATM fees, foreign transaction fees, and card replacement fees. A lot of banks and credit unions offer free checking, which means they won’t hit you with minimum balance charges or monthly maintenance fees. But be careful of the old bait and switch. You may get introductory freebies for a while but get chained to higher fees later.
4. ATMs and Branches
Many banks slap you with fees for using an ATM from another bank. If you love to use your ATM to pull out some cash for your envelope system, make sure you have a good network that won’t charge you fees. If your bank or credit union has several branches, that increases your chances of having convenient, fee-free ATMs nearby.
5. Mobile and Online Banking
This is a no-brainer, right? A strong website, mobile banking and apps that all work together will change your life. Well, it will make managing your money more convenient. You want to be able to transfer money, view your accounts, make payments, and make mobile deposits. Some sites and apps even include an ATM finder and offer text alerts when your balance is low.
6. Ease of Use
You want to choose a bank or credit union that you actually enjoy doing business with. If you have to spend a lot of time finding information about a particular bank, then you know you need to go somewhere else. Who has time for that? Their lack of online presence tells you they’re not interested in reaching out to this generation of users.
You also need to know if a bank has good customer service. You can check online reviews, but take those with a grain of salt. Internet trolls lurk everywhere! The best way to find out about a bank is word of mouth. Just ask friends and colleagues where they bank and if they have had good experiences. If you can contact your bank in multiple ways (phone, email, text, social media, online chat), then you know that bank is making an effort to take care of its people.
In today’s hack-happy world, you can’t be too careful when it comes to protecting your money and personal information. The other features on this list won’t matter if a middle schooler can hack into your bank. If it has wimpy security, that’s a red flag to go elsewhere.
You also want to make sure your money is insured. Most banks and credit unions are insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA). Both will cover accounts up to $250,000. That means if the bank goes belly up, you’ll still get your money. So, if a bank or credit union isn’t insured, don’t give them your money!
Remember, banks make billions charging people fees, finance charges and penalties for using their own money. Protect your cash by finding a bank you can trust, knowing what features you need, and shopping around for the best deals. It’s your money—and you’ve worked hard for it—so work with a bank or credit union that’s right for you!