How to Choose a Bank
- Choosing a bank requires some work
- Traditional banks
- Online banks
- Credit unions
- Cost and fees
- Pros and cons
- The bottom line
Choosing a bank requires some work
Step 1: Assess your needs
Step 2: Review type of bank accounts
Step 3: Look at interest rates, aka APY
Step 4: Review protections and convenience
- Network ATMs – are there any nearby?
- Is there a mobile banking app?
- Can I deposit a check online?
- Are there branches nearby?
- Can I talk to a human if I need help?
Step 5: Choose a bank
- Traditional bank. These are typically national banks with many branches. These brick and mortar banks offer many financial products (such as credit cards, loans) but may charge some account fees.
- Online banking. Unlike traditional banks, online banks work only online. Because they’re saving on having brick-and-mortar banks, they can typically offer a higher APY on savings accounts and may have a better digital banking experience.
- Credit unions. A credit union is similar to a bank but is actually a financial co-operative. Credit unions are not-for-profit organizations that serve their members and act as community banks. Many credit unions have a membership based on shared professions (such as teachers), location, or employer. Credit unions typically invest profits back into membership by offering higher savings interest rates as well as lower fees.
Bank of America
Cost and fees
- Overdraft fees. An overdraft fee is a charge that is triggered by the bank if you spend more than what is in your account at the time of purchase. When you do that, you overdraw your account and incur an overdraft fee.
- ATM fees. Some banks may have ATM fees that you should look out for. Verify the cost and compare it among the different accounts. On the other hand, some banks or credit unions may reimburse you for ATM fees so if you get cash at a different bank’s ATM you won’t be responsible for the charge, making them fee-free ATMs.
- Foreign transaction fee. If you go abroad and use your debit card or credit card, you could incur a foreign transaction fee. A foreign transaction fee is basically the cost of running your card in a different country. Some banks offer cards with no foreign transaction fees.
- Lost card fee. Things happen and your card could end up lost. Check to see if the bank charges a lost card fee.
- Replace checks cost. Even though checks are becoming extinct, you may still have to use checks for rent or paying contractors. If you run out of checks, how much does it cost to order new checks?
Pros and cons
- Access to more branches
- More financial products available
- Comprehensive ATM network
- May have monthly maintenance fees
- Interest rates aren’t as competitive
- May have minimum account balance requirements
- Typically offers higher interest rates
- Little to no service fees
- Convenient mobile app
- May have a smaller ATM network
- No human connection
- Difficult to deposit cash
- Offers high interest rates on savings
- More affordable rates on loans
- Lower fees
- Fewer financial products available
- Limited branches
- Potential for a poor online/mobile experience
The bottom line
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