How to Choose a Bank

Most people use a bank as the main provider of financial services. Selecting the right bank can have a lot to do with how satisfied you are with the way your money is managed and, ultimately, how well you attain your financial objectives. Picking a bank is a matter of evaluating your needs and choosing an institution that offers the best fit in terms of services, costs and other important features. If it is time for you to find a new bank, this is how to choose a bank so you can find the right financial institution for your needs.

Working with a financial advisor can help you to get your financial life on the right track with a solid financial plan.

Banking Basics

Banks are financial institutions whose primary purposes include accepting deposits and giving loans. They also provide many other services, including facilitating access to deposits through checks and ATMs. Many offer credit cards, give investment advice and sell securities.

There are a number of different types of banks. Some major ones include traditional banks, online banks, credit unions and small business banks. These major types can be further subdivided; for instance, traditional banks consist of both small community banks and giant national banks.

Assessing Your Needs

The first step in choosing a bank consists of evaluating your needs.

One important consideration is whether you are comfortable banking solely online and communicating with your bank only via the web, email, text, phone or mobile app. Others may prefer to have a brick-and-mortar bank branch where you can talk to a human representative. If you do elect to go with a conventional bank that has branches and ATMs, be sure to look at how many locations the bank has and whether they are conveniently located.

Also, consider what type of accounts and services you will need. Do you need a checking account for paying bills? Will a savings account that allows only limited transfers and withdrawals each month be enough?

You may also want to have other types of accounts, such as certificates of deposits, retirement accounts or brokerage accounts.

Some banks offer home mortgages and insurance as well, so you may want to think about whether you want those. Other considerations include whether you will need to wire money internationally, would like to get financial advice or have documents notarized for free. Some banks provide these services, as well.

Features to Look For

A man researches how to choose a bank on his phone.

There are some banking features that are essential for any banking customer.

The first is safety. You will probably only consider banks with Federal Deposit Insurance Corporation (FDIC) insurance. This protects you against a loss of up to $250,000 per account. Fortunately, nearly all banks are members of the FDIC. You can identify them by the FDIC logo on their web pages and advertisements.

Even if you envision doing much or all banking face-to-face at a branch or through an ATM, it’s still a good idea to pick one that offers online banking. Like FDIC protection, most banks have online banking. Many customers find it very convenient to check balances, make payments, transfer funds, make deposits and perform other tasks with a computer or smartphone rather than visiting a branch or ATM.

Banks typically have some type of mobile app, as well. For many customers, it is their preferred way to work with their financial institution. It makes sense to look for a bank with an app and, ideally, one that is highly rated by users.

Some banks offer a single checking or savings account, while others offer a wide variety. Different accounts target different types of customers. For instance, student checking accounts typically offer low fees but limited services, while premium checking accounts may come with hefty fees but include perks such as free cashier’s checks.

The Issue of Fees

No discussion of banks is complete without talking about fees. Banks may charge many kinds of fees. Monthly service fees, ATM fees, overdraft fees, check printing fees and fees for using human tellers or calling customer service are some you may encounter.

Banks may not prominently advertise all their fees but will provide a complete schedule of fees on request. Be sure to obtain a copy to see what kind of fees accompany your account so you can determine whether the account is worth it. .

Banks also often offer ways to avoid fees. For instance, if you maintain a minimum daily balance or have a qualifying direct deposit, you may be able to skip the monthly service charge. See how fee exemption policies match up to the way you plan to use the account. Overdraft fees, which are charged any time you spend more money than is in your account, can add up especially quickly and deserve close scrutiny.

Some accounts also earn money in the bank. Savings accounts, certificates of deposit, cash management accounts and, less frequently, checking accounts pay interest on balances. Interest rates on bank deposits are low compared to typical returns on investments such as stocks.

Still, always look at the interest you can earn on your deposits when picking a bank, especially if you intend to keep a lot of money there.

To help you decide which bank to use, you can use bank reviews that describe a bank’s offerings in detail. Reviews may also directly compare two or more rival banks. Other reviews list the best banks according to overall benefits.

How to Switch Banks Without Disruption

If you have decided to move to a new bank, planning the transition carefully can help avoid missed payments or account issues.

Start by opening your new account and ensuring it is fully functional.This includes activating your debit card, setting up online banking and confirming deposit and withdrawal capabilities.
Update any automatic payments, direct deposits or linked accounts to use your new bank information. This may include payroll, subscription services, utility bills or credit card payments. Keep your old account open for at least one full billing cycle to ensure all scheduled transactions clear without error.
Once you have confirmed that all payments and deposits have successfully shifted to your new bank, transfer the remaining balance and formally close the old account. Request written confirmation of the closure to avoid future fees or account reactivation. This process ensures a clean switch with no missed payments or duplicate charges.

Bottom Line

No bank is perfect for everyone. When determining how to choose a bank for you, start by considering how you will use the bank. Then, evaluate the candidates according to how well their services, costs, interest rates and other features stack up against your needs. Consider using comparative reviews to help you survey the field and make a final choice.

Ask a financial advisor the best way to structure your bank accounts to meet your long-term goals.

Banking Tips

While you’re considering a bank, also think about connecting with a financial advisor who can help you with all your financial decisions. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors who serve your area. You can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Many banks offer periodic promotions to attract new customers. You may be able to get a cash bonus of hundreds of dollars by opening a new checking or savings account as long as meet the requirements. These are typically maintaining a minimum balance or having a certain number of qualifying transactions per month. A cash bonus is not reason enough to choose a bank that won’t meet your needs long-term. But if you have identified a few banks that seem more or less identical, the chance to get a bonus can make the final decision easier.