Let’s say you’re moving to a new community and thus need a new home for your banking and checking services, or let’s say you’re in a situation where you’ve lost faith in your current bank and wish to move to a new financial institution. You need a new bank for your primary checking account and savings account.
If you’re in a city of any size at all, you’re probably flooded with banking options. There are likely several local banks with just a few branches. There are probably some local credit unions. There are probably a few regional banks that are quite popular in your state. You’ll also find some national banks, like US Bank, operating branches near you. Add those all together and the number of options is just staggering.
What exactly do you do? This is one of those “paradox of choice” situations where people can be almost paralyzed by the number of choices, or else they simply go to the first choice they find and go with it. (I have a friend that just joins whatever bank is closest to her new home whenever she moves – I mean, it’s a strategy that does make at least some sense.)
Here’s the catch, though: Choosing the right bank is going to have a pretty strong impact on your financial path over the next few years. A bank with stability, low fees, great customer service, and solid interest rates is going to leave a lot more money in your pocket than a bank with lots of fees, mediocre interest rates, and difficult customer service, on the order of hundreds of dollars a year. Making the right choice will have a real impact.
So, how do you figure out which bank is the right one? Here’s the strategy I used when switching banks in the fairly recent past.
Make a list of accessible banks and credit unions.
First of all, I made a list of banks and credit unions in my area to which I have reasonably good access. I consider having at least one branch that I go near in a typical week to be a good threshold here – if I have to go far out of my way to bank, I’m not interested. Physical access to a branch is very important for your primary checking account because if things go wrong, the ability to access an actual physical person that you can talk to face to face is vital.
Online-only banks do offer great services in some regards, but I would only use them for secondary banking purposes such as a savings account for a specific goal or as the accounts for managing a side gig. Being locked out of your personal checking account due to a bank error and not having a person to talk to face to face is not a position that I would put myself in. You can have a face-to-face conversation with a branch manager and see what they’re actually doing to resolve your problems, but you can’t really do that via an online chat with a remote customer service rep.
So, my first step is to simply identify all banks and credit unions that are within a mile or two of my house, my typical commute, and the places I shop. You can do this easily with Google Maps.
Check the basic facts of each one.
For each of those banks/credit unions you’ve listed, go to their website and find out a few facts about them.
Are their accounts FDIC (or NCUA) insured? If they’re not, drop that bank from this list like a hot potato. FDIC insurance means that your accounts are insured against the bank’s failure up to $250,000, meaning that if the bank goes under, the first $250,000 of your balance will be returned to you. That’s a must. If a bank doesn’t offer this, run away from it. (Federally insured credit unions are backed by NCUA instead, which is similar to FDIC insurance.)
What is the interest rate they offer on your usual savings account balance? Consider how much money you typically have in savings, then use that to identify your savings account rate for that balance. Multiply the two together to assess how much you’ll get in interest in a year. (It’s worth noting that this will vary as interest rates change over time.)
What is the interest rate they offer on your usual checking account balance? Do the same exact thing with the checking account, if their checking account offers an interest rate. (Again, interest rates will vary, but this is a good thumbnail sketch.)
What fees are charged on the accounts you expect to have with them? This will take a little more homework, as banks typically aren’t completely up front with all of the fees. Some of the ones that you can typically find with a bit of searching on their website are account maintenance fees, minimum balance fees, ATM fees, overdraft fees, returned deposit fees, and foreign transaction fees (if you ever travel abroad).
I’d suggest starting a document on your computer to keep track of this information as you go, so that you have a single central place with which to compare options.
Check out online discussions about the bank and get opinions from friends.
Once you have this basic information on several banks and credit unions, go online and find out about their reputation. Are there a lot of negative reports about the bank? Banking horror stories? Criticisms? Most banks will have one or two bad stories out there, often written up by people who have unrealistic expectations or are hiding key parts of their stories, but large quantities of bad reviews are a telltale sign of some problems that you want to avoid.
Poke around on their Facebook page, on Twitter, and in the archives of Facebook groups for your community. Remember, what you’re looking for is significant quantities of negative reviews, particularly ones where it’s not apparent that the bank or credit union did anything to fix the problems. Finding old reviews that are negative with more recent reviews that are positive typically means that the negative problems were addressed and aren’t worth worrying too much about.
At this point, a few financial institutions should be clearly ahead of the pack. Take those banks to your social network. Ask friends in the area what bank or credit union they use and what they think of your top candidates. Again, a single negative view shouldn’t shift everything for you, but consistent negativity should be a big warning sign.
Follow up with the top candidates.
What you’re looking for are financial institutions that excel in all of those areas – FDIC insured, local availability, good interest rates, low fees, happy customers. You’ll likely wind up with an institution or two or three that really do well with these factors.
When you’re trying to make a final decision, contact each bank/credit union. Stop by a branch and talk to an employee about their account offerings directly. The key thing to do on this final visit is to assess whether employees are immediately helpful when you go in the door of a branch, as well as filling in any information holes you might have. To be very specific, make sure you use this opportunity to go through the fees on the account. Are they fully open about their fees or do they try to be shady about them? Hit on all of the fees mentioned earlier: account maintenance fees, minimum balance fees, ATM fees, overdraft fees, returned deposit fees, and foreign transaction fees.
After this, you’ll probably have a top candidate and that’s the one you should go with. If you find yourself struggling between two or three really good options, I suggest going with the one that will likely put the most money in your pocket after a year (the interest you expect to earn minus the fees you expect to get hit with).
When I went through this exact process, it didn’t take long to find all of my arrows pointing at two particular local financial institutions, and it was stopping in the branches and asking questions that cinched my choice. I talked to a nervous cashier at one that seemed to be almost trying to hide fees, while at the other bank the manager came out and introduced herself and was incredibly personable and open with every fee they charged. I chose the second one, unsurprisingly, because I felt confident that if I walked in there with an issue, it would be handled smoothly and professionally.
Good luck! May you find a bank or credit union that meets all of your needs!
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