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What to consider when choosing a bank
Choosing a bank is a big decision with many different factors to consider. Trust is essential. After that, it might help to prioritize the factors that align with your financial habits and goals.
Convenience is also important. For some people, this might mean proximity to physical branches and ATMs. For others, it means robust digital banking tools like mobile apps for easy management of accounts and automatic transfers.
Excellent customer service is crucial for resolving issues and getting assistance when needed.
Finally, assess the range and quality of products offered, such as various types of savings and checking accounts, and how well they meet your current and future financial needs
Here’s a primer on the top things to consider when choosing a bank:
Fees and charges
Think about your banking history and whether you've tended to incur fees in the past. Fees and charges can increase the overall cost of banking by eating away at account balances. When comparing banks, look for ones that have low or no monthly maintenance fees, especially for the services that matter most to you like ATM and overdraft protection.
Some banks will waive fees if you meet certain conditions, like using direct deposit, maintaining a minimum balance, or having a linked account. While you are assessing fees, look at the bank’s rules for waiving them too
Interest rates
There are two ways of looking at a bank's interest rates. Banks charge interest rates on loans and, if they offer them, credit cards. But they also pay interest on deposits. Consumers want to maximize savings growth and minimize borrowing costs. When assessing banks on this factor, you might come across the term Annual Percentage Yield (APY). It offers a more complete picture of what your money might earn in a savings account or CD. The APY includes the interest a deposit could earn in a year, including the effects of compound interest.
If savings are important to you, check on a bank’s high-yield savings accounts. These accounts have many of the features of a savings account but have much higher interest rates, or APYs.
Customer service
Dealing with financial matters can be stressful. When trusting a bank to manage your money safely, you want the interactions with the bank and its personnel to be positive experiences. Accessibility is very important. Judge banks on the customer services that matter most to you, including 24/7 support, phone access, chatbot, email responsiveness, and branch locations
Convenience
People expect to have easy access to their money in today's hyper-connected world. Most people want banks that have plenty of ATMs and branches close to the places where they live and work.
Check what ATM network a prospective bank is on to get an idea of whether you’ll be able to find an ATM in convenient locations. If you have to use another bank's ATM just because it's closer, you'll probably end up paying extra fees.
Other things to consider are the number of branches a bank has and if they're open during the weekend
Online and mobile banking
Many modern consumers like to do their banking on smartphones and laptops and won’t give a bank a second look if they don’t offer comprehensive online and mobile banking services. Common digital amenities to look for include mobile apps, mobile check deposit, bill pay, budget tools, and alerts on overdrafts, payments due, unusual activity, and other issues
Security and fraud protection
You'll want to know that a prospective bank offers fraud protection and employs state-of-the-art security measures to protect your money and account information. Ask if the bank employes firewalls, encryption, and 24/7 monitoring for online and mobile banking.
Next, check on the sophistication of a bank’s services related to transaction alerts, fraud detection, identity theft prevention, and data protection, including two-step verification
Range of products and services
It’s convenient to have one bank that can take care of all your financial needs. For example, the typical customer doesn’t want to have apps, passwords and two-party identification protocols for multiple banks. Beyond that, when customers can have multiple accounts with one bank, they might get benefits like lower fees and higher savings rates.
Checking and savings accounts, credit cards, loans, mortgages, investments, and insurance are some of the products and services to look for when choosing a bank
Reputation and financial stability
Before deciding to open one or multiple accounts at a bank, read online reviews and news reports about it. If the bank doesn’t have a solid reputation and an unblemished record of financial stability, think twice about doing business there. Look for four-star reviews and JD Powers awards.
Check to see if the bank is FDIC insured. The FDIC (Federal Deposit Insurance Corp.) automatically covers checking and savings accounts, money market deposit accounts, and certificates of deposit at an insured bank for up to $250,000 per depositor, per insured bank, per account ownership category
Perks and rewards
People value perks and rewards from banks because they can offer tangible financial benefits and enhance their overall banking experience.
Cashback, interest earnings, and other incentives essentially pay customers for their banking activity, making their money work harder for them. These rewards contribute to a sense of value and can offset costs while making banking more appealing and financially advantageous. Typical rewards and perks include:
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Lower interest rates on loans. Banks often offer preferential interest rates on loans to customers who have other accounts with them, especially those with significant deposits. These relationship rates might also mean higher interest rates for savings accounts
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Fee waivers. Many banks waive monthly service fees for checking or savings accounts if you maintain a certain minimum balance, set up direct deposit, or have multiple accounts with them
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Cash back rewards. Banks often offer credit cards that provide a percentage of your spending back as cash. These rewards typically can be redeemed in various ways, including statement credits or direct deposits
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There's always more to learn when it comes to managing your money.