What matters most when picking a bank

The right bank for you depends on how you actually use money — not on which bank has the most branches or the biggest name. A bank that works well for someone who deposits paychecks and pays bills online might be wrong for someone who needs to deposit cash frequently or who wants to talk to a person about a loan. Before you compare interest rates or fees, think about what you do with your money each month and what frustrates you about your current setup.

Most people choose between a traditional bank (with physical locations), an online bank (no branches, lower fees), or a credit union (member-owned, often better rates). Each has real trade-offs. A traditional bank costs more but you can walk in. An online bank saves money but you cannot deposit cash at a teller. A credit union often has better rates but membership rules vary. The choice is not about which is objectively best — it is about which fits your life.

Key Takeaways

  • Decide whether you need to deposit cash in person, because online banks cannot take cash deposits and this eliminates them for some people.
  • Compare the actual fees you will pay — overdraft charges, monthly maintenance, ATM fees — not just advertised rates, because fees can erase any interest you earn.
  • Check whether the bank's ATM network covers places you actually go, because using out-of-network ATMs adds up fast.
  • Read the fine print on minimum balance requirements, because some banks waive fees only if you keep a certain amount on deposit.
  • Test customer service before you move your money, because you will need help eventually and some banks make it harder than others.

Decide between a traditional bank, online bank, or credit union

A traditional bank has physical branches where you can deposit cash, get a cashier's check, or talk to someone about a mortgage. You pay for this convenience through higher monthly fees (often $10 to $15) and lower interest rates on savings. If you rarely use branches, you are paying for something you do not need. If you deposit cash weekly or want to sit down with a loan officer, the branch is worth the cost.

An online bank has no branches — you deposit checks by phone camera, transfer money through an app, and handle everything digitally. Online banks pay higher interest rates on savings accounts and checking accounts because they have lower overhead. They typically charge no monthly fees. The catch: you cannot deposit cash, and customer service is phone or chat only. If you get a paycheck by direct deposit and rarely need cash, an online bank usually saves you money. If you are self-employed and deposit cash from clients, it will not work.

A credit union is owned by its members rather than shareholders, and membership is usually tied to your employer, your location, or an organization you belong to. Credit unions often offer better interest rates and lower fees than traditional banks, and they tend to be more flexible with lending. The downside: not all credit unions are in all places, their technology can lag behind banks, and you need to meet membership requirements. If you may have access to for one and your employer or community has a credit union, it is worth comparing.

Calculate the fees you will actually pay

Banks advertise interest rates, but fees are what actually cost you money. A checking account that pays 0.01% interest but charges $12 a month in maintenance fees costs you money every month, even if you never overdraft. Read the fee schedule — usually a PDF on the bank's website — and add up what you will pay in a year based on how you use the account.

The fees that matter most are: monthly maintenance (waived if you keep a minimum balance or set up direct deposit), overdraft fees (charged when you spend more than you have), ATM fees (charged when you use another bank's ATM), and foreign transaction fees (charged when you use a card abroad). A bank that charges $35 per overdraft and you overdraft twice a year costs you $70 annually. An online bank with no overdraft fees saves you that money. If you never overdraft, the fee does not matter to you — but be honest about your habits.

Some banks waive monthly fees if you keep a certain balance on deposit, often $500 to $2,500. If you cannot maintain that balance, you will pay the fee every month. Do not choose a bank based on a waived fee you cannot actually get.

Check the ATM network and deposit options

An ATM network is the list of machines where you can withdraw cash without paying a fee. If your bank has 50 branches but you live two hours away from all of them, the network does not help you. Look up whether the bank has ATMs near your home, your workplace, and places you go regularly. Many banks are part of shared networks — for example, a small regional bank might be part of a network of 30,000 ATMs nationwide — so check what the bank actually offers, not just its own branches.

Using an out-of-network ATM usually costs $2 to $3 per withdrawal. If you withdraw cash twice a week, that is $200 to $300 a year. Some online banks reimburse out-of-network ATM fees, which solves the problem if you do not mind waiting for the refund. Others partner with convenience store chains like Allpoint or MoneyPass so you can withdraw at grocery stores and pharmacies for free.

For deposits, traditional banks and credit unions take cash and checks at the teller. Online banks take checks by phone camera (you photograph the front and back and the bank deposits it) but cannot take cash. Some online banks partner with retailers like Walmart or CVS to accept cash deposits, but not all do. If you receive cash regularly, confirm the bank's deposit method before you open an account.

Compare interest rates on savings and money market accounts

Interest rates on savings accounts vary widely — from 0.01% at some traditional banks to 4% or higher at online banks and credit unions. The difference matters if you have money sitting in savings. A $10,000 balance earning 0.01% makes $1 per year. The same balance at 4% makes $400 per year. Over five years, that is $2,000 versus $20,000. Online banks and credit unions almost always pay more because they have lower costs.

Interest rates change frequently, so do not choose a bank based on today's rate alone. Look at the bank's history — does it usually pay competitive rates, or does it drop rates as soon as you open an account? Read recent customer reviews to see whether people felt the rate was worth it. A bank that pays 4.5% today but drops to 0.5% in six months is not a good deal.

Some banks offer money market accounts, which are savings accounts with higher interest rates but require a larger minimum balance (often $2,500 to $10,000) and limit how many withdrawals you can make per month. If you have money you will not touch for months, a money market account at a credit union or online bank often pays more than a regular savings account. If you need access to the money, a regular savings account is simpler.

Test customer service before you move your money

You will need customer service eventually — to dispute a charge, ask about a fee, or get help with a problem. Some banks make this easy; others make it hard. Before you open an account, try contacting the bank's customer service with a simple question. Call the phone number, use the chat feature, or email. How long did it take to get an answer? Did the person actually help, or did they read from a script? Would you want to deal with this bank when you are frustrated?

Online banks often have good chat support but no phone support, which works if you prefer typing but fails if you need to talk to someone. Traditional banks have phone support and branches, but wait times can be long. Credit unions vary widely — some have excellent service, others are slow. Read recent reviews on sites like Trustpilot or the Better Business Bureau, but weight recent reviews more heavily than old ones because service changes.

Also check whether the bank offers the specific services you need. If you want a business account, a mortgage, or a credit card, confirm the bank offers it before you apply. Some online banks do not offer mortgages. Some credit unions do not offer business accounts. Switching banks later because they do not have what you need is a hassle.

Understand FDIC insurance and account safety

The Federal Deposit Insurance Corporation (FDIC) insures deposits at banks up to $250,000 per account holder, per bank. This means if the bank fails, the government returns your money up to that limit. Credit unions are insured by the National Credit Union Administration (NCUA) with the same $250,000 limit. This protection is automatic — you do not have to do anything — and it applies to checking accounts, savings accounts, and money market accounts.

If you have more than $250,000, you can protect the extra by opening accounts at different banks or by opening joint accounts (each joint account is insured separately). For most people, this is not a concern, but if you have substantial savings, understand how the insurance works before you choose where to keep your money.

All banks that take deposits are required to be insured, so this is not a reason to prefer one bank over another. It is a reason to avoid keeping money outside the banking system or with an institution that is not FDIC or NCUA insured.

Frequently Asked Questions

Should I switch banks if my current bank charges high fees?

If you are paying $10 to $15 monthly in fees and an online bank or credit union charges nothing, switching saves you $120 to $180 per year. The switch takes a few hours — you open a new account, set up direct deposit, and transfer your balance — but it is worth it if the fees are high. Keep the old account open for a few weeks in case a payment bounces, then close it.

Is an online bank safe?

Online banks are FDIC insured the same way traditional banks are, so your money is protected up to $250,000. Online banks use encryption and security measures similar to traditional banks. The main risk is user error — if you share your password or fall for a phishing email, someone can access your account. This risk exists at any bank, not just online banks.

Can I have accounts at multiple banks?

Yes. Many people keep a checking account at one bank and a savings account at another to take advantage of better rates or lower fees. You can have as many accounts as you want, as long as each bank's minimum balance and fee requirements fit your situation. Just make sure you can track all of them and remember which account is which.

What if I need a loan — does the bank matter?

Yes. Credit unions often offer better loan rates and more flexible terms than traditional banks, especially for personal loans and car loans. Online banks usually do not offer loans. If you think you will need to borrow money in the next year or two, check what each bank offers before you choose. A bank with slightly higher fees but better loan rates might save you money overall.

How do I move my money to a new bank?

Open an account at the new bank, then ask them to transfer your balance from the old bank using an ACH transfer (usually free and takes 3 to 5 business days). Set up direct deposit at the new bank so paychecks go there. Update any automatic bill payments to pull from the new account. Once everything is moved, close the old account. Keep it open for a few weeks first to catch any payments you forgot about.