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Guide to choosing a bank for the average consumer

Bob Haegele

Updated Thu, Aug 29, 2024 5 min read

Picking a bank is a big decision. After all, this is where you will keep your hard-earned money and, hopefully, have easy access to it when needed. The best banks also keep your money safe, pay interest on your deposits, and charge few fees.

These features are definitely something to look out for as a consumer, but not all banks will rise to the occasion. With so many choices — big banks, community banks, online banks, and even credit unions — selecting the right one can feel like a big task.

But don’t worry: If you’re looking for a simple guide to choosing an all-around solid bank, we’ve got you covered. Here’s what to look for when choosing a bank and how to select the best one for your needs.

How to choose a bank

Choosing where to keep your money is important, but it doesn’t have to be difficult or stressful. The following steps can help you identify the best place to keep your money.

1. Put together a wish list

The first step in finding the best bank for you is to decide on your must-haves. This list has endless possibilities — it’s up to you to determine what’s most important.

For instance, most banks have basic checking and savings accounts, but perhaps you’re interested in a high-yield money market account (MMA) or certificate of deposit (CD) to help your savings grow. Look for a bank that offers the types of accounts you need.

Interest rates may also be an important factor. Credit unions, online-only banks, and online divisions of traditional banks might pay rates much higher than their brick-and-mortar counterparts for deposit accounts, as well as offer lower rates on loans.

Fees are another major consideration. Some banks may charge a monthly maintenance fee to customers who don’t meet a specific minimum balance, for instance. Other banks, such as SoFi, operate with the mission of eliminating bank fees.

Also, consider whether having physical branch/ATM access is important. Online banks can have some of the highest interest rates on checking and savings accounts, but that comes with the trade-off of no branch access. If you want to work with a banker directly or deposit cash without fees, an online bank might not be the best fit.

These are just some examples of bank features you might require. Come up with your own list of four to five key features that you need out of your next bank.

2. Narrow down your options

Once you’ve determined the features you need from your bank, the next step is to research which institutions offer them. It can help to narrow down the type of bank you want to work with:

National banks: These banks tend to have plenty of branches and offer a wide range of products, but can have higher fees.
Community banks: Their service might be more personalized with a focus on helping the community and local businesses. However, they don’t have national branch availability and might offer fewer products.
Online banks: These banks are known for higher interest rates and lower fees, but they usually lack physical branches and may offer limited customer service.
Credit unions: These are not-for-profit institutions that may have better service and lower fees than other banks. However, they often require a membership and have fewer branches than national banks.

While each kind of bank tends to have certain pros and cons, there can always be exceptions. You can usually find the most accurate and up-to-date information about each bank on its website. This includes details such as accounts offered, available services, interest rates, fees, and branch/ATM access. Use this information to narrow your list down to a few options.

3. Dig into the bank’s reputation

Once you have narrowed your choices down to a few, look into each bank’s ratings and customer reviews. Good places to check include the Better Business Bureau (BBB), Trustpilot, and the Consumer Financial Protection Bureau’s complaint database.

Pay close attention to what reviewers say about customer service and their experiences working with representatives. You can also look at each bank’s mobile app ratings, which will tell you about the experience customers have with the app. This might include positive experiences, as well as possible crashes and glitches.

4. Evaluate the bank’s security and technology

When you keep your money at the bank, you want it to be safe. Today, most banks and credit unions are insured by the FDIC and NCUA, respectively, for up to $250,000 per institution, per depositor, per ownership category. This means that if the institution fails, your money is guaranteed by the government up to the federal limit. While this insurance is common today, it’s worth ensuring the bank you are considering carries it.

If you expect to do your banking while on the go, you should also look into the bank’s online and mobile banking platforms. Banking apps, for instance, should let you perform key banking tasks such as checking account balances, transferring money, and depositing checks — all while maintaining strong security measures. You might also want it to have a relatively modern and sleek interface, which isn’t always the case with smaller financial institutions.

5. Make your selection

By now, you should have narrowed down your options to your top pick. At this point, it’s time to open a new bank account and, if necessary, close out your old ones.

You can often open a bank account online within minutes. However, to streamline the process, you should have your documentation ready. That includes identification such as a driver’s license or passport, Social Security number, and proof of address.

If your account has a minimum opening deposit requirement, your next step is funding the account. This can usually be done by transferring funds electronically or mailing in a check.

Finally, you’ll need to do a bit of housekeeping. That may include setting up direct deposit, creating bank alerts to monitor your account activity, and updating any autopayments.