How to Choose a Bank: Three Things to Consider

Whether you want to open a savings account or you’re shopping for personal loans, the banking services you choose should be adjusted to your individual needs. With so many traditional and online financial institutions on the market, consumers can get a bit confused when picking the right bank.

This process can be even more complicated for those who open a bank account for the first time. Luckily, we are here to help you with the decision-making process.

Which Bank is Right for You?

The best bank is one that fits your financial needs. That said, a good bank is a bank that can respond to your shifting financial situation and support your financial habits while satisfying your future financial plans.

For example, if you’ve just started your own business, you should choose a bank that supports business growth. When opening a bank account, some consumers focus on savings only. Whether it is for a dream house or a child’s college fund, many banks offer high-yield accounts for consumers with stable financial history. 

How to Choose the Right Bank 

Whether you are opening a bank account for the first time or looking for a new bank, our guide will help you make a smart choice. There are three things to consider - bank type, financial products offered, and fees. Additionally, other miscellaneous benefits can help you make a final decision if several banks provide similar deals.

You first need to know that there are different types of financial institutions providing banking services.

Traditional Banks 

If you prefer face-to-face business, traditional banks are the best option for you. Traditional banks are the oldest type of bank, obviously, offering financial services through a network of brick-and-mortar shops. Choosing a bank of this type comes with lots of benefits.

Usually, traditional banks offer a wide range of financial products, from checking accounts and loans for personal needs to various financial products for small businesses. An extensive network of ATMs and in-person support at local branches are also good reasons why many consumers choose traditional banks over online banking and credit unions.

However, traditional banks usually come with more expenses than online banks, so you should think about what you actually need before opting for this type of solution. 

Online Banks

Unlike traditional banks, online banks offer services and products through websites and phone support. Some of them have brick-and-mortar offices, but most of the consumers do banking online.

For generations used to doing everything online, branchless banks are a better fit, as everything can be done from the comfort of your home or via a mobile app. Lower fees and competitive rates also work in favor of online banks. 

Credit Unions

Credit unions are member-owned financial organizations that provide financial services and products to their members. Unlike traditional banks that must reach revenue goals, they are nonprofit organizations, which means that the profit is returned to the members through lower fees and high-interest rates.

You should also consider the connection between the credit unions and the local communities. If you want to give something back to your community, you should choose a credit union. 

Financial Products Offered 

Banks offer a wide range of financial products and services for both individuals and businesses. Before you choose a provider, think about what type of account you need. There are various bank accounts to choose from, including checking accounts, savings accounts, high-yield savings accounts, certificates of deposits, etc.

If you need more than a bank account, consider a bank that offers other types of banking services such as loans, mortgages, credit cards, etc. Some banks have specialized in providing services in the area of budgeting and managing personal finances, offering products that can help you achieve your financial goals faster. 

Consider a Bank With Affordable Fees and Interest Rates 

In our opinion, banks that offer zero or low fees on checking accounts and other types of products should be your priority. Since online banks usually have few or no physical offices at all, they have lower costs than traditional banks. Hence, the fees you pay will be lower due to reduced operational costs compared to traditional banks.

Before opening an account at a bank, check what kind of costs you will need to pay and check the prices. Consider the following typical costs, at least some of which almost every bank will charge you for: 

• Monthly maintenance fees
• ATM fees
• Overdraft fees
• Foreign transaction fees
• Account fees

Aside from fees, you should also check interest rates. This is especially important if you want to open a savings account. Check interest rates for this account type at different banks and credit unions so that you can choose the most beneficial one.

What Else to Look For

After you decide which type of financial institution is right for you and choose the type of account that you need, check other features that you can take advantage of. Each bank offers different kinds of discounts; some boast free financial tools, mobile apps, and other useful features. 

ATMs

If you make withdrawals frequently, a good bank to bank with is the one that has an extensive network of ATMs. Almost all good online banks don’t charge fees on in-house ATM withdrawals, but not all of them have a large number of ATMs available.

Picking a bank with ATM machines in different locations will help you travel a lot and need to withdraw your funds often.  

Local Branches 

Local bank offices might also be important to you, even if you decide to do business with an online provider. So, consider banks that have offices close to your location. 

Online and Mobile Services

Modern online banks enable users to streamline the application process for all types of products, from checking accounts to car loans and mortgages. In addition, they offer mobile and desktop apps that allow access to your account at any time you need it, so having this option available is a must-have today.