How to Choose the Best Bank for Your Needs
At some point in your life, you’ve probably thought about what qualities you want in your life partner, your dream house or your workplace.
But maybe you haven’t given much thought to what you want in a bank. Many people simply sign up with whichever bank their parents used, or whichever bank is closest to where they live. It can save you headaches, hassle and money if you get more strategic about finding the right bank for your needs.
At a bare minimum, you want a bank that’s insured through the FDIC (that’s the Federal Deposit Insurance Corporation). That means that if your bank fails (yeah, it happens), the government will make sure you get back any money that was in your checking, savings, money market and certificate of deposit accounts, up to $250,000.
From there, you’ll want to consider two things: how a bank can save (or earn) you money and how convenient a bank is for your personal needs.
With interest rates being so low for the last few years, there aren’t many banks currently offering jaw-dropping interest rates to entice you to open a savings account. However, you’ll still want to shop around and get the best deal you can.
Perhaps even more importantly, you want to make sure you won’t be paying a bunch of fees that will eat up your meager interest earnings. There’s pretty much no reason to go with a bank that’s charging a monthly service fee simply to have a checking account. Many banks offer "free checking," but you’ll still want to read the fine print to look for other hidden fees.
Other fees to watch out for:
- ATM out-of-network fees. Some banks charge you up to $5 per transaction if you happen to use an out-of-network ATM. To avoid this, look for a bank with a robust ATM network. Some online banks even offer to reimburse out-of-network fees.
- Overdraft protection fees. The average fee in the U.S. for overdrawing your account is $34. Ouch. Many banks allow you to tie your checking account to your savings account, so your savings can cover it if your checking account falls a little short.
- Early account closure fees. Some banks will charge you if you close your account within a short time after you open it.
- Minimum balance fees. Be very careful about this one. Some banks will charge you a monthly fee if your balance drops below a certain threshold -- sometimes a threshold that most Americans would consider quite high -- like in the thousands of dollars.
We’re all busy every day just trying to earn a living, so don’t add to your to-do list by keeping your money someplace that makes accessing it inconvenient. You want to choose a bank that makes it easy to set up direct deposit and has mobile deposit options for any paper checks you receive.
Most banks offer online banking these days. Make sure you like the user interface and functionality available, including online bill pay, which saves you time and postage stamps.
Many banks are online only, but if a physical branch is important to you, make sure there’s one nearby and that it has convenient hours.
Last, but not least, you’ll want to check out some customer reviews. Are there lots of complaints about hidden fees or not being able to talk to a human when you need one? If so, keep shopping.