How to pick the best bank in 6 steps

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Maybe you’re dissatisfied with your current bank’s service. Maybe you want to pay fewer fees or earn more interest. Or maybe you’re just ready for something new. Just because you’ve had one bank forever doesn’t mean it’s still the right bank for you.

There are many reasons why you’d want to find a new bank. But it all boils down to picking one with features that align with your financial needs.

Here’s a six-step guide to finding the perfect bank for you.

1. Determine your financial needs

What are your financial goals? What do you want to get out of a new bank? Those should be the first questions you ask yourself, says Armando Sallavanti, a certified financial planner at MassMutual.

Financial goals include saving for a house, planning for retirement, or building an emergency fund.

“Your goals dictate the services you need,” Sallavanti says. “Make sure your goals align with what is truly important to you. Not what ‘should’ be important.”

It’s also essential to think about your timeline and how much money you have. Some banks may be less accessible or require an initial deposit when opening an account. Reviewing your goals also helps you determine the level of assistance you may need down the road.

2. Research different banks

Finding the right bank is like finding the right pair of shoes — there are many different types, and some just aren’t going to fit.

Each bank will offer unique products, interest rates, fees, and customer service. By comparing different banks, you can find one that aligns with your goals.

Here are the five primary types of financial institutions:

• National banks are brick-and-mortar institutions with a network of branch locations. These banks advertise as a one-stop shop, assisting with everything from checking accounts to mortgages. Their size and scale may include a catalog of special perks and an extensive ATM network. The downside is that many national banks have higher fees and lower interest rates.
• Regional banks are also brick-and-mortar institutions catering to their local community's needs. Access to a local banker may help you get better financial advice or loan terms. But this personal touch comes with trade-offs, like obsolete mobile apps (if they have them) and a limited ATM network.
• Credit unions take the community aspect of regional banks to the next level. They’re member-owned and pass their earnings down to members through lower loans and higher savings account rates. But similar to regional banks, credit unions may have technological limitations.
• Online banks are convenient for those who don’t need in-person banking support. The best online banks have robust mobile apps, advanced security, and high interest rates, making it easier to bank independently.
• Neobanks are licensed financial institutions that partner with established banks. Neobanks often provide competitive rates on their bank accounts. Both online banks and neobanks don’t have physical locations, which may make it difficult to get immediate help.

You don’t have to stick to just one type of bank. Banking across multiple institutions helps you leverage their unique advantages.

3. Review the bank’s products and services

Once you’ve narrowed down your list, you’ll want to review each bank's products and services. Consider both the accounts you currently have and the ones you may want to open in the future.

Here are some common bank account types (and the best places to find them):

• Checking accounts: A convenient account for everyday money management focused on easy withdrawals and deposits. The best checking accounts are often found at national banks due to their often fee-free transactions and large ATM networks.
• Savings accounts: Traditional savings accounts are generally a safe (and accessible) space to store funds. These accounts are often found at brick-and-mortar banks because of their scaled ability to protect your money. Keep in mind these accounts come with low interest rates.
• High-yield savings accounts: Like the name suggests, these accounts offer compelling interest rates, often exceeding 5% APY (compared to the national average of 0.55%). High-yield savings accounts are often available at online banks and neobanks, though some larger banks and credit unions offer them.
• Money market accounts: These accounts have high rates and features like debit cards or check-writing capabilities. Keep in mind some may have minimum balance requirements and transaction limits. Most banks offer these accounts, though you’ll often find MMAs with no minimum balance rules at online banks.
• Certificate of deposits (CDs): These accounts offer high interest rates in exchange for locking up your money for a set period of time. If you withdraw your money before the term is up, you may pay a penalty. CD rates depend on the term length and are offered by most financial institutions. You may find more variety or specialty CDs (like no-penalty CDs) at larger banks.
• Loans: Some banks — including traditional and online banks — allow you to borrow money for a house, car, or business. To ensure you’re getting the best terms on your loan, compare offers from both national and regional banks.
• Investment services: Many banking platforms offer investment services via fee-free independent investing or fee-based robo-advising.

4. Consider accessibility

While earning interest and using perks is excellent, at the end of the day, you’ll want an account that gives you access to your money when you need it.

Accessibility is a crucial factor to consider when evaluating banks. All banks have varying levels of liquidity, meaning you don’t always have unrestricted control of your money.

For example, some banks don’t have a network of fee-free ATMs, so you may have to pay a fee to withdraw cash. Others may have minimum balance requirements, so you'll need to keep a certain amount in your account to keep it open or avoid fees.

Accessibility also means accessing certain services, whether through physical branches, online banking, or mobile apps. By prioritizing accessibility, you can save time and effort by banking at your convenience.

5. Review the bank’s security features

Ensuring the safety and protection of your money is a top priority. This means ensuring both your money and personal information are safeguarded.

Reputable banks have FDIC insurance, which protects depositors if a bank fails, typically up to a limit of $250,000 per person per bank. NCUA insurance provides a similar level of protection for credit unions.

Banks that are proactive about security use fraud prevention tools such as two-factor authentication, encryption, biometric authentication, and transaction monitoring. A bank with robust security shows its commitment to protecting your financial interests.

Always read the terms and conditions before deciding on a bank. As banking increasingly becomes a digital industry, it’s essential to review the privacy policies before signing the dotted line.

6. Think about fees

“Your bank shouldn't nickel and dime your hard-earned money,” Sallavanti says.

Banks charge fees for all sorts of reasons. Comparing fees helps you avoid unnecessary costs, allowing you to make the most of your money. Common fees to look out for include monthly maintenance charges, ATM withdrawal fees, overdraft fees, and foreign transaction fees.

While opting for a bank with no fees may be simpler, some fees may not affect you. For example, if you don’t make international transfers, it won’t matter if your bank charges a wire transfer fee.

Comparing each bank's fees with your financial habits can help you avoid fees and find the right bank for you.

The bottom line

The best bank for one person isn’t always the best one for someone else. The best bank for you today may not be the best for you 10 years from now — especially with how rapidly financial technology disrupts traditional banking methods.

That’s why reviewing your bank accounts is essential to ensure your financial institutions are helping you meet your financial goals.

Editorial disclaimer: Opinions expressed are author's alone, not those of any bank, credit card issuer, or other entity. This content has not been reviewed, approved, or otherwise endorsed by any of the entities included in the post.