How to Choose a Bank

Banks keep your money safe and help you invest. But how to choose? It's information overload out there. From the outside, all banks look pretty similar. Picking the best option is a problem many customers face.

Before you choose a bank, decide what you prioritize (e.g. interest rates, online access, whatever) and use the process of elimination to choose the best. That way, you can quickly run through the short checklist at the end of this article.

Here are questions to consider before you choose a bank. Once you answer these, you'll be well-equipped to pick a single bank from thousands of options.

How to find the right bank: The basics

Finding the right bank doesn't have to be difficult. In fact, you can accomplish it in just a few easy steps.

1. Decide what type of bank you want: Online banks, regional banks, credit unions, and national banks are all options.
2. Think about what you'll use your bank for: Define your goals. Some accounts are best for people making direct deposits while others are ideal for frequent ATM users or those interested in online bill pay.
3. Research account options: Many banks have dedicated accounts for college students. Others may have fee-free checking or interest-bearing checking accounts that reward you for your deposits.
4. Make sure the bank is FDIC insured: Most banks are. This insurance protects up to $250,000 per person, per bank in case of bank failure.
5. Look out for account fees: Some banks charge a monthly maintenance fee, overdraft fees, or fees for using an ATM.
6. Check out the account's benefits: Does the account offer budgeting tools or overdraft protection or other perks you can take advantage of?
7. Evaluate the bank's mobile app: If digital banking is important to you, check the bank's website and mobile app to make sure it offers the functionality you want.
8. Read the bank's customer service reviews. This will give you good insight into other users' experiences.
9. Open your account: Finally, apply to open an account online and decide whether to open an individual or joint personal account or a business bank account.

Taking these simple steps can help you to find the perfect bank. There are even more details about each step below.

1. Decide what type of bank you want

There are different places to open a bank account including:

• Online banks: Online banks do not have a physical location. That can make withdrawing and depositing funds more challenging. However, they often offer more favorable terms, such as low or no fees.
• Small regional banks: Smaller regional banks may be more customer-focused and accessible, but may not offer as many account options.
• Large national banks: Large national banks offer a full array of account options and financial services but may lack the personal touch -- and some have bad reputations for dishonest behaviors.
• Credit unions: Credit unions are member-owned non-profits and may offer better service and lower rates, but you usually must be eligible to become a member and sometimes must pay a membership fee.

Weigh the pros and cons of all these options. If you prefer to be able to access an ATM often and get personalized service from a banker you get to know, a local regional bank or credit union may be best. But if you'd rather avoid fees and do most of your banking digitally, an online bank could be ideal.

2. Think about what you'll use your bank for

Will you have your paycheck directly deposited into your account? Do you plan to regularly take money out of an ATM to easily access your cash? Are you hoping for a place to cash checks?

Your intended uses for your account shape what type of account to open. Different accounts cater to different kinds of customers. For example, many banks waive monthly maintenance fees if you direct deposit your paycheck while others will refund you fees charged when you use an out-of-network ATM.

Before you can find the right account, you need to know your goals.

3. Research account options

Once you've decided what type of bank you're interested in, research the options available. Check out online banks or local banks to see what checking and savings accounts they allow customers to open. Most will have several options such as:

• Student checking: These accounts cater to young people and may have low or no minimum balance requirements and limited fees.
• Simple or basic bank accounts: These are basic accounts that may come with lower monthly maintenance fees and lower minimum balance requirements but fewer features.
• Premiere accounts: These accounts may require a higher minimum balance or higher monthly fees but may also offer added benefits such as cashiers checks with no fees.
• Savings accounts: Savings accounts are intended to help you save toward financial goals, unlike checking accounts which are designed for money you plan to spend. You'll usually be paid a higher interest rate on deposited funds, but your money may not be as accessible (for example, you may not have an ATM card).

4. Make sure the bank is FDIC insured

It's a good idea to double-check that your bank has FDIC insurance (Federal Deposit Insurance Corporation) before you open an account. This protects your money up to $250,000 per account per bank in the case of bank failure. To check, navigate to the FDIC BankFind Suite webpage, enter your bank's name, fill out details, and click Search.

Credit unions are insured by the National Credit Union Administration (NCUA), which has the same function as the FDIC. Check if a credit union is insured by using the Find a Credit Union website to check whether it's classified as a federal credit union (FCU). All FCUs are NCUA-insured.

5. Look out for account fees

Account fees can cost you a lot of money. Here are some fees to look for:

• Monthly maintenance fees: Some banks charge you to be a customer. You may be able to avoid this by fulfilling certain requirements, such as having a certain number of direct deposits, but you need to be aware of what the rules are for charges.
• Out-of-network ATM fees: If you use an ATM outside of your bank's partner network, some banks charge you for doing so. Others not only won't charge, but may even reimburse any fees imposed by the out-of-network ATM.
• Dormancy fees: These would be fees that are charged if you don't keep your account active.
• Overdraft fees: If you spend too much out of your bank account, you may be charged an overdraft fee.
• Paper statement fees: Some banks charge if you want paper rather than digital statements.

Ideally, you should look for an account that allows you to keep fees to a minimum.

6. Check out the account's benefits

You'll also want to find an account that provides as many benefits as possible. Some things to look for include:

• ATM fee reimbursement: This means your bank pays you back if an out-of-network ATM charges a fee.
• Overdraft protection: Your bank can stop you from getting hit with a fee or getting a transaction declined, often by temporarily moving money from elsewhere.
• Budgeting and financial education tools: Some banks offer budgeting features, free credit scores, and other tools to help manage money.
• Attractive interest rates: Savings accounts pay interest and some checking accounts do as well. A higher rate means your deposited funds earn more money for you.
• Secure online banking: You want to be able to sign into your account online without worrying about fraud.
• Debit card rewards: Some banks provide rewards for using your debit card, similar to credit card rewards.

Not all banks offer all of these features. Decide which are important to you and look for a bank that offers the most perks possible that you're interested in.

7. Evaluate the bank's mobile app

These days, many banks let you manage accounts online. Even brick-and-mortar banks like Chase and Wells Fargo offer free apps in the App Store. Check customer reviews for the good, the bad, and the ugly. Some in-app experiences are clearly superior.

You'll want to pay attention to functionality as well. Will the app allow you to chat with a customer service representative? Can you deposit large checks right from your phone or mobile device?

8. Read the bank's customer service reviews.

Customer service is important, especially if you choose a brick-and-mortar bank. Check out online reviews on verified sites like Trustpilot. Do different customers mention the same issues? Are they generally happy with how the bank handles money issues?

Cross out banks that consistently mention things that displease you. Reviewers tend to be angry or ecstatic, so reviews are typically biased toward the worst and the best experiences banks offer. The key is to look for issues brought up again and again.

9. Open your account

Finally, after comparing fees, benefits, perks, and finding a bank with a mobile app you are comfortable with, you can apply for an account. You can open your account as an individual or jointly with a spouse, partner, or other friend or loved one. You can also open a business bank account if you're running a company.

In most cases, you can apply for an account online and get instant approval. You can fund your account with a transfer of money from another bank if you have access to one, or by making a deposit on your phone or via ATM or teller. You can also arrange to have paychecks and other income sources, such as Social Security benefits, deposited directly into your account.

Once you have opened the account, be sure to manage it wisely by keeping tabs on your balance and watching the fees you pay. Hopefully, you'll have chosen a bank you are happy with and can keep your account open for a long time.

Putting it all together

We've all been there, wondering where to park our cash, but feeling overwhelmed by choices. To be honest, many banks offer similar features. You can open an affordable bank account online or offline. So long as your needs are met, you're probably fine.

Open an account with your favorite remaining bank. You can even open accounts at multiple banks if you think that's the best move. For example, you could open a high-yield savings account at Bank A and open a certificate of deposit (CD) at Bank B.

Be aware that the more accounts you have, the more effort it takes to manage them. Should you change your mind, feel free to switch banks. You're not locked in. If your bank no longer meets your needs, you can close your account and open a new one.