How to choose a bank
Choosing the right bank for you is a big decision. Where you bank may have the potential to influence key aspects of your personal financial management. Let’s take a look at some factors you may want to weigh when deciding on how to choose a bank.
What bank should I use?
Before you try to answer the question, “What bank should I use?”, it might be useful to begin by determining what your own unique banking needs are. Different financial institutions offer different ranges of services. Understanding your requirements might help you narrow the options down. Here’s a breakdown of the major types of financial institutions and some of their typical products and services:
Traditional banks are financial institutions which typically provide a comprehensive suite of services, including a variety of checking and savings accounts, loans, credit cards, financial management services and more. They tend to have physical, brick-and-mortar branches, as well as online and mobile banking, and a network of ATMs, providing in-person assistance and access to your funds.
With a focus on digital services, online banks, also known as “neobanks,” may try to offer competitive interest rates on certain account types. They typically provide essential banking services like checking accounts, bill payment and money transfers but often lack physical branches.
As member-owned, not-for-profit organizations, credit unions aim to offer lower fees than banks, and competitive interest rates on loans and savings accounts. Beyond this, they typically offer similar banking services to traditional banks, but generally have fewer physical branches and ATMs.
What to look for in a bank
When choosing a bank, there are several factors you may want to look for. Considering these elements when reviewing your options might help highlight some potential frontrunners in your decision.
- FDIC or NCUA insurance: This insurance, provided by the Federal Deposit Insurance Corporation (FDIC) for banks, and the National Credit Union Association (NCUA) for credit unions, helps protect your deposits up to certain limits in case the financial institution fails. When evaluating what to look for in a bank, highlighting institutions that are FDIC or NCUA insured may provide additional peace of mind.
- Fees: Banks may charge various fees such as account maintenance, ATM usage or overdraft protection. Knowing the fee structure of banks you’re considering may reveal which ones align best with your financial habits.
- Interest rates: Interest rates are one of the major factors impacting the rate at which your savings grow. They also have a significant effect on your loan affordability. Comparing the interest rates offered by different financial institutions might help you make a more informed decision.
- Customer service: The quality of a bank’s customer support could potentially make a big difference to your overall banking experience. Factors like responsiveness, availability and the bank’s reputation for addressing customer concerns could help paint a picture of the banking relationship you might have if you became a customer.
- Convenience: Similarly, a bank with user-friendly digital services and an extensive network of ATMs and branches might contribute to a smoother banking experience.
How to compare banks
While choosing a bank, the considerations above are helpful things to look out for, but how do you evaluate them? There are two main ways to do it:
Many financial institutions make their fee structures, account offerings and interest rates available online. Reading online customer reviews and supplementing your research with recommendations from friends and family could also help you potentially gauge the reputation and customer satisfaction of different banks, providing insight into some of the considerations above.
If the bank you are considering has brick-and-mortar locations, visiting the local branches may offer valuable information about a bank’s services and customer experience. Interacting with bank representatives might also help you better understand their products and assess the level of customer support they could potentially provide. A personal banker can help guide and educate you on your finances and, should you choose to do so, representatives may also be able to help you open an account right then and there.
Additional things to consider when choosing a bank
As you navigate the process of choosing a bank, there are a few more aspects that may be worth considering when answering the question, “What bank should I use?”
- Account sign-up bonus offers: Some banks offer additional incentives, such as sign-up bonus offers, waived fees, discounted loan rates, or free tools to help manage your money, which may enhance the value of their services.
- Financial education services: If a bank provides educational resources, such as articles, webinars or tools to help manage your money, that means they’re invested in helping you make more informed decisions about your money and foster financial literacy. This may be a relationship worth fostering.
- Community involvement: If supporting local businesses and communities is important to you, it might be worth considering a bank that actively takes part in community initiatives and philanthropy.
- Security measures: Learning more about the bank’s security protocols, such as their data encryption, fraud detection measures and two-factor authentication methods may provide insight about how dedicated they are to helping you protect your transactions and financial information.
Learning how to choose a bank involves understanding your needs, comparing the financial institutions available and considering which factors are influencing your banking experience. As you explore your options, remembering to assess account types, fees, interest rates and customer service may help you make a more informed choice.