When it comes to banking, there are numerous options to choose from. The market is such that in some areas you see banks on almost every street corner. Turning to the internet for banking options can be equally overwhelming as banks today try to maximize their online presence.
The abundance of options can make choosing a bank difficult, but having plenty of choices also helps you find a bank that can fulfill your unique needs. By asking the right questions you can sort out which bank is just right for you. Learn how to choose the right bank with these insider tips:
- How To Choose the Right Bank
- Tips for Choosing a New Bank
- What To Consider Before Choosing a Bank
How To Choose the Right Bank
Finding the right bank takes time and patience, and it can be difficult to figure out where to start. Here are some tips on what to look at first when trying to choose the right bank:
- Identify Core Values: One of the best things you can do is to research the bank branches in your area, read their mission statements and learn how their values align with yours. For example, you might want a more community-oriented bank rather than a big national one, so look for a bank with a strong local focus.
- Determine Your Needs: Take a moment to identify the products and services you need. Check which banking services you are currently using and then find a bank that offers the same or even better options.
- Read the Fine Print: If you think you’ve found the right bank, read the associated disclosures before opening an account. You don’t want to sign up for an account with requirements you’ll never meet.
Related: Best National Banks of 2020
Tips for Choosing a New Bank
Wading through all the different banking options available can be a head-spinning experience, so it’s important to tighten your focus. Outlining and narrowing your search criteria will come in handy as you search for a new bank. Here are a few other insider tips to consider when choosing a new bank:
Figure Out What Kind of Bank You Need
Banks come in many shapes and sizes — from small community institutions to huge national and international banks — but all offer similar products and services. Your answers to these questions can help you identify the types of accounts and services you need:
- Do you deposit paper checks or accept direct deposits? Some banks offer accounts that limit the number of checks you’re allowed to write each billing cycle. Others, like Bank of America and Wells Fargo, waive monthly maintenance fees if you receive regular direct deposits from an employer, pension or Social Security.
- How often do you use an ATM? If you’d rather withdraw cash at an ATM instead of through a teller, your ideal bank should have ATMs near where you spend your time. Otherwise, you might rack up fees using out-of-network ATMs.
- How much money do you have available to keep in the account after you’ve paid your bills? Some banks require you to maintain a minimum balance to avoid a monthly maintenance fee. If you can’t meet the requirements to waive the fees, you probably want a bank that offers an alternative account with limited fees.
- How often do you need to speak with a representative in person? If you’re willing to give up the personal experience of walking into a branch to speak with a bank employee directly, you might find better interest rates and account terms at online banks. On the other hand, an online bank might not be the best choice if you prefer having a branch nearby.
- What types of accounts do you want? You don’t have to find a single bank that meets all your financial needs. An online bank might be the best option for a savings account if it offers a high annual percentage yield and isn’t linked to your checking account. A local brick-and-mortar bank might be a better choice if you like to keep your checking account closer to home.
- How often do you travel? If you spend a lot of time on the road, you’ll find it easier to access your cash — and avoid ATM fees — if you choose a national bank or one that’s a member of a large network. If your travels take you overseas, look for a bank that has a partnership with international banks or one that doesn’t charge foreign transaction fees when you swipe a card or take out cash.
Most banks are pretty good at keeping up with the times. This means offering high-tech bells and whistles — including digital tools — to accompany the usual suite of products and services. As technology continues to evolve, banking should evolve as well to meet consumer expectations.
Digital technology is a staple in today’s banking world, so you should expect your bank to offer the latest platforms. Search for banks with mobile apps and user-friendly websites. You should be wary of banks that don’t offer standard mobile deposits and electronic funds transfer functionalities. These features should also be free.
Other services that are becoming increasingly popular are peer-to-peer payments, which let individuals transfer money to one another directly. Chase QuickPay, Venmo and Zelle are just a few popular P2P platforms that consumers use. Being able to send a payment to virtually anyone, anywhere, at any time is a necessity for many consumers. If you’re looking for a modern bank, ask if it offers an integrated P2P platform.
Consider These Fees Before Joining
Banks make additional revenue by charging customers fees for specific services that you might have thought were complimentary. For example, some banks charge a debit card replacement fee if you lose your card while out shopping or traveling. Similarly, if you need to place a stop payment on a check, there is a fee for that as well.
Many banks have moved toward a relationship banking model, which means that certain services that would normally incur a fee are complimentary, depending on how much money you deposit with the bank or how many accounts you have open. Some banks also offer limited-fee accounts.
For example, Wells Fargo plans to launch a checkless account with no overdraft fees as well as one with limited overdraft fee exposure. While the accounts will incur monthly service charges, the ability to access additional funds without racking up hefty overdraft charges will be of greater importance to many consumers.
Always ask for a schedule of fees before considering a new bank. Also, research and compare overdraft and nonsufficient funds fees, as these charges can fluctuate between banks. Be wary of accounts that require monthly minimum balances. If you cannot meet the threshold, you will often incur a fee each month.
Learn More: Best Checking Accounts of 2020
You don’t want to bank with an institution that isn’t compatible with your needs and habits. If you’re not tech-savvy, for instance, then an online bank might not be the best option.
The best way to figure out if a bank fits your needs is to determine which products and services you need the most. This might include ATMs, personal checks or mobile deposits. Remember to weigh every aspect of a bank account. As an example, recurring fees can easily offset a higher-than-average interest rate on a savings account. Similarly, you might not want an account that requires you to sign up for certain services to avoid fees if you know you won’t need or use the services.
Don’t Forget About Credit Unions
Banks aren’t the only places to store your money. Most credit unions offer the same services as banks, including checking and savings accounts, loans and credit cards. Unlike banks that want to earn a profit for their investors, credit unions are nonprofit financial institutions with member-owners. You might find lower loan interest rates and higher savings interest rates at local credit unions than at commercial banks.
Check Out: Best Online Banks of 2020
What To Consider Before Choosing a Bank
Because there are so many banking options available to consumers today, banks go to great lengths to bring in new clients. Some offer promotional deals or incentives to hook you into opening a new account.
For example, some banks might offer extremely low initial interest rates on loans to lure new business or cash bonuses for signing on to an account. When researching banks, always check for promotional offers. Just keep in mind that a bank that offers low loan rates might lack in other departments, such as readily-accessible customer service.
Don’t choose a bank based solely on a promotional offer or advertised rate. Investigate thoroughly and make sure there isn’t a catch that could come back to bite you later. Consider all the products and features a bank can offer before signing on with it.
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This article has been updated with additional reporting since its original publication.