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.

Banks fall into three broad categories: brick-and-mortar, online, and credit unions. We'll look at each of these below.

Brick-and-mortar banks

Brick-and-mortar banks have been around forever. They have a branch or two in your neighborhood, and you can head over to get in person help when you need it. You can even manage your money through the bank's app or website. But maintaining a branch network is costly, so these banks usually charge you more fees.

Online banks

Online banks offer zero branches. This significantly lowers their operating costs, and they pass their savings onto customers in the form of lower fees and higher annual percentage yields (APYs). They also have strong online and mobile banking tools.

Credit unions

Credit unions aren't technically banks, but they offer many of the same services. These are usually smaller local or regional institutions, and they can offer more competitive rates than large brick-and-mortar banks. But membership may be limited, and you probably won't find branches or ATMs outside your local area.

Checking accounts. Savings accounts. Certificates of deposits (CDs). Whatever you want, you can get it from the right bank. Consider the kinds of accounts you want to open before choosing a bank.

Brick-and-mortar banks offer the most options. They might offer brokerage accounts, lending products, and more bells and whistles than you need. That's nice when you want to do all your banking in one place.

Online banks and credit unions typically offer fewer options. But what they do offer tends to be top tier. Fee-free checking accounts and high-yield savings accounts are common. That's great when you're content to stick to basic accounts.

You can mix and match banks to get the best of all accounts. But by doing so, you may be unable to view all your balances in one place without a budgeting app that tracks your accounts.

Online vs. brick and mortar: Which type of bank should you choose? That depends on how you plan to access your funds. It boils down to cash access and in-person services.

Brick-and-mortar banks give you more ways to transfer cold, hard cash. To do so, you can visit the nearest bank branch or ATM. Online banks partner with traditional banks to let you withdraw cash from big, established ATM networks. But depositing cash is tricker. You may have to jump through hoops to deposit cash into an online bank account.

Brick-and-mortar banks let you access funds by speaking with representatives in person. If that's important to you, consider choosing a traditional bank. But if you're tech-savvy and willing to communicate remotely, then consider online banks. Online banks offer the best apps and let you manage funds at any time, regardless of where you are.

Many traditional bank accounts have minimum balance requirements. If you don't meet these,  the bank will slap you with monthly maintenance fees. Seek out bank accounts with reasonable balance requirements. Or turn to online banks, which typically impose zero balance requirements or maintenance fees.

Those with large savings balances may also want to consider online banking. Online banks tend to offer higher APYs on savings accounts and CDs, and that can translate to more money for you over the long run. The table below compares savings account APYs for some of the top online versus brick-and-mortar banks so you can see the difference.

Once you narrow down your options to a handful, you can compare fees. Some banks charge hidden or expensive fees you may not expect. Some common fees include:

• Monthly maintenance fees
• Out-of-network ATM fees
• Overdraft fees
• Wire transfer fees

The more features a bank offers, the more fees it charges (generally speaking). It's a trade-off.

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.

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.

Some banks are known for specific tools (like round-ups, which save your change) that you might find especially useful. You can find these mentioned in customer reviews and App Store descriptions. Click the drop-down beneath the app preview to skim important features.

Finally, 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.

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.

Here's a checklist to make choosing a bank easy:

1. Decide whether online or brick-and-mortar banks best meet your needs.
2. Write down three banks that meet your must-have features.
3. Cross off banks with the worst fees, reviews, and features.

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.