As free checking accounts become scarce, low interest rates persist and negative headlines about banks remain constant, choosing where to bank is getting tougher. Still, a good bank is a necessity and sits at the center of most of your financial accounts. With just a little research and insight, you can find the bank that's right for you. Here's how:
Be realistic. Figure out exactly what you need from your bank.
- Look at past statements. These will help you to see what you are currently paying in fees or earning in interest. Your new bank should do better.
- Think about your banking behavior. It sounds obvious, but if you run out of cash and have to hit up an ATM at the convenience store, you might want a bank that refunds ATM fees. Does your account balances often dip below $1,000? You want very low or no minimum account balances.
- Limit your accounts. If you currently have multiple checking and savings accounts, you'll cut down on paperwork if you consolidate. Also, it might help boost your balances, which can help you save on fees.
Shop around, online and offline. Don't just look at the bank around the corner.
- Comparison shop. Websites like FindaBetterBank and BankRate can help narrow down the field of candidates, allowing you to compare interest rates, account balance requirements, monthly fees and ATM surcharges.
- Go local. In many cases fees and required minimum balances may be lower at credit unions or local and regional banks. Plus, unlike in the past when it was hard for most people to get access to a credit union, membership eligibility has gotten easier since many local institutions have expanded the field to include anyone who lives, works or worships in a particular community.
- Go online only. Because of lower cost structures, many Internet banks still offer free accounts and more competitive terms in general, like reimbursing ATM fees. Many also waive fees if you elect to have electronic statements or use direct deposit (some brick-and-mortar banks will do the same).
Ask questions. Talk to representatives to find out more.
- Get on the phone. If you're not seeing an answer to a question on the bank's website, call up a representative. Be sure to press them for an answer if the response you get is vague.
- Understand every step. Make sure you understand fee schedules, requirements and other ins and outs of your account before signing up. For example, when it comes to deposits, ask about how soon a deposit will get credited to your account. If the response is anything other than "as soon as possible," keep shopping.
What not to do when shopping for a bank
- Don't get dazzled by promos. Unless the account has every feature you want anyway, promotions like introductory interest rates, free check printing, or cash bonuses won't end up being a good deal. Plus experts say, in many cases, these promos are only temporary or have strings like high account balances attached.
- Don't pay for stuff you don't need. Features like debit rewards programs or overdraft protection might sound like nice options in theory, but in many cases they aren't worth the fees.
- Don't make it hard to break up. It sounds counter-intuitive, but you'll have more flexibility in the long run if you set up your automatic bill payments through your bank, rather than giving your account information to each biller. Otherwise, you'll have to contact each biller to change account information once you switch.
For more information check out: The Federal Deposit Insurance Corporation (FDIC) has data and information about deposit insurance and consumer protection. The Consumer Financial Protection Bureau (CFPB), at consumerfinance.gov. FindaBetterBank also has articles on understanding balance requirements, debit cards and debit rewards programs, and online banking and BillPay. Read the U.S. Public Interest Research Group's report on bank fees. Also check out the shopper's guide on the Center for Responsible Lending's website helps identify questions and red flags about banking practices.