Choosing the right bank can be tricky, especially if you aren’t quite sure what to look for.
With so many options out there these days, it can be easy to just stick with the big mega bank you’ve been using for years. In fact, most Americans have a checking account with one of the four largest banks: Bank of America, JPMorgan Chase, Citi and Wells Fargo. According to Consumer Reports, these “big banks” hold about 40% of all U.S. commercial bank assets.
But with all the various banking options available to you these days, there are several factors to take into account when deciding which bank — or credit union — is best for you.
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There’s no reason to stick with a bank that has poor rates and bad customer service
The good news is that if you aren’t 100% satisfied with your bank, choosing the best bank that fits your needs is easier than ever. And even if you do feel satisfied with your bank, it’s crucial that you shop around to make sure you’re getting the best bang for your buck.
There are so many low-cost and convenient options available these days, you don’t have to settle for one bank or one offer.
In fact, you can get specific services from as many banks as you want — which can often be the best way to get the best deal on each product or service. There’s no rule against having separate accounts at a bank, credit union and online bank — or a combination of two.
Most people stick with the same old bank because they just don’t want to deal with the hassle of moving everything — but it can be a lot easier than you think.
What to look for in order to get the best service, lowest costs
Checking & savings accounts
There are a few key factors to consider when choosing where to open a checking or savings account.
- Fee-free checking
- Few fees in general
- No required minimum balance
- High savings rate
Your best bet is generally going to be a credit union or online bank. A study from Bankrate.com says 82% of the largest credit unions offer free checking.
- Look for a credit union that’s a member of a network, such as the CO-OP system of 30,000 fee-free ATMs and 5,000 shared branches. Find out which credit unions you’re eligible for at CUNA.org.
- You can also go to MyCreditUnion.gov and use the ‘CU Locator’ tool to comparison shop different credit unions.
- If mobile access is important to you, make sure that the institutions you’re considering offer online and mobile account access — plus whatever other tools and resources you may need.
- Look at online banks — many of them offer the same products and services as traditional banks, but with fewer fees, lower costs and higher returns. Plus, many offer great apps, easy access to your accounts and overall user-friendly experiences.
Certificates of deposit (CDs)
- Start by comparing interest rates for certificates of deposit (CDs) at online banks and credit unions that were rated highly by Consumer Reports.
- The best deals you can get will vary based on the amount you plan to deposit and the period of time you invest.
- Here’s more on what to know about CDs.
- Your best bet is a credit union — they typically offer the lowest rates.
- If you aren’t a member of one, find out which ones you’re eligible to join and then get pre-qualified for a loan before you start car shopping.
- What you want to avoid is high fees and banks that just try to sell you their own investment services.
- Check out Vanguard, Fidelity, T. Rowe Price and USAA
- Check out our guide on the best investment firms for your money
How to switch to a new bank
Switching banks can be a breeze or could get a little tricky depending on how many accounts, cards, automatic payments and other things you may have set up through your current accounts. Here are a the steps to take to make the process as easy as possible.
1. Open a new checking account
If you’re switching your primary banking services to a new bank, credit union or online bank, first open a checking account to start the process of moving things over. Most banks will allow you to do this online. Opening the new account may require an minimum initial deposit, but just make sure there’s no annual fee on the checking account.
2. Switch your paycheck direct deposit
This process may take your bank some time, so it’s better to do it as soon as you open the new account. Here’s a quick and easy step-by-step guide on how to get it set up through your new bank.
3. Stop automatic bill payments
If you use automatic bill pay for any of your monthly bills, make sure to stop those immediately. Just make a note of when each bill is due each month if you’re worried about forgetting to pay without the automatic bill pay doing it for you. There are two ways to do this:
- If you use “push” payments, which are payments you schedule to be made on certain dates each month, then you should be able to cancel those through your online account.
- If you use “pull” payments, which authorizes the company to pull the money out of your account each month, then you may have to contact the company directly to get that canceled.
Important note: If you are using automatic debit transactions that allow companies to access your checking or savings account, you need to cancel those immediately!
When it comes to monthly payments and bill pay, Clark suggests not turning off the paper statement option. If you have the bills sent to you in the mail each month, you will always have records of everything in case a mistake is ever made.
4. Temporarily keep your old account open
Don’t close your old checking account until all outstanding payments have been made — and have cleared your account.
5. Close the old account
Once all balances have been paid off, you can transfer the money from your old checking account to your new one, or get a check from the bank to deposit into your new account.
6. DO NOT close credit card accounts
If you open a new credit card and don’t use your old one anymore, do not close the account — that will damage your credit. Just let the account sit there after the balance is paid off. Here’s more on how credit cards impact your credit score.
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