How Do I Pick the Best Bank?

Date: June 13, 2016

Picking a bank can feel a little like online dating, with lots of short profiles to pick from and everyone offering slightly different benefits. Don't be swayed by cheap gimmicks like a free T-shirt or another token gift when you're deciding. Changing banks can take time, especially if you have to update all your automatic bill pays and direct deposits, so choose wisely.

Determine Your Service Needs

Before you start comparing banks, make a list of what you need from a financial institution. For example, some people are perfectly content to do all their banking on a computer or smartphone, in which case an online bank might be sufficient. If you want to be able to visit a branch or meet with bankers in person, however, an online bank just won't cut it for you, regardless of their rates. 

Some banks might offer discounts if you have multiple products with them, such as a car loan or mortgage in addition to a checking or savings account. If you need lending services or expect to need them in the near future, a bank that offers perks for multiple accounts can save you money.

Which Account Features Benefit You Most

Decide what fees would hit you the hardest and what perks are worth the most to you. Although many banks require that you maintain minimum account balances, they can vary greatly. If you tend to keep a very low balance in your account, finding a bank that doesn't require large minimum balances — or one with minimal fees for dropping below the minimum — is a key factor.

The interest rate won't affect you much. Alternatively, if you keep a larger balance, having a bank that pays a higher interest rate is more attractive, even if it requires a slightly higher minimum balance.

Make Sure the Bank Is Insured

The Federal Deposit Insurance Corporation (FDIC) offers insurance that protects customers if a bank fails. The insurance covers up to $250,000 per customer per account category, such as individual accounts, joint accounts and retirement accounts.

Although FDIC insurance only covers banks, credit unions aren't left out in the cold. If you're considering a credit union, look for one that is protected by the National Credit Union Share Insurance Fund. The NCUSIF has the same $250,000 limits that the FDIC offers, so you're protected in case the bank goes bankrupt.

Geographic Footprint

If you like to bank in person or you regularly stop by the ATM for cash, make sure a bank's geographic footprint is convenient for you. For example, if you prefer to visit your bank in person, one that doesn't have a branch near your home or office would be a hassle, even if it has slightly better features. Similarly, if you use your ATM card to make withdrawals regularly, make sure the bank's ATMs are convenient for you to visit or find a bank that waives ATM fees.

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