If you’re searching for the best bank, you have a dizzying number of choices. The growth of online and mobile banking means there are more ways than ever to do your banking on your own time and terms — not your bank’s.
According to the Federal Deposit Insurance Corporation, FDIC-insured banks lost about 4.8% of their brick-and-mortar offices from the beginning of 2009 to June 2014. In keeping with that trend, the nation’s largest bank, Chase, announced plans to close 300 branches during 2015 and 2016.
Meanwhile, a Federal Reserve study found that 74% of adults used online banking to access their accounts in 2014, up from 65% in 2011. And online-only banks such as Everbank and Ally are luring customers with higher interest rates than traditional banks. More than ever, you can now choose where and how you bank according to what works best for you.
The Simple Dollar’s Top Picks
Still, there are some characteristics that set the best banks apart from the rest of the crowd. The Simple Dollar has done the work for you to find the nation’s best banks.
Best Traditional Large Banks
- Best bank for customer satisfaction: Chase Total Checking®
- Best bank for availability: Wells Fargo
- Best bank for stability: BB&T
Best Online Banks
- Best bank for high interest rates and low fees: Ally
- Best bank for comprehensive online offerings: Discover Bank
- Best bank for checking only: Bank5 Connect
Best Traditional Banks
The growth of online banking certainly doesn’t mean the end of traditional banking: 87% of respondents in this Federal Reserve study still went to branches in 2014 to access their accounts. While we may no longer need a branch for most day-to-day banking, many customers still want the option, especially for more complex transactions.
Best Bank for Customer Satisfaction: Chase Total Checking®
Chase Total Checking® is the nation’s largest bank by assets — it had a whopping 13% of the entire industry’s assets at the end of 2014. Fortunately, Chase has managed to keep its customers relatively happy despite its mammoth size.
Why it’s worth a look: Chase fares far better than its big-bank competitors in a major customer satisfaction survey, scoring above average in more than half the regions where it has retail locations. Chase also offers almost any financial product you need, whether that’s a basic checking account, a home equity loan, or a private investment advisor. With 5,100 branches and 16,000 ATMs, it’s easy to access cash when you need it. Right now, get a $200 bonus when you open a new Chase Total Checking® account and set up direct deposit.
Why you might want to skip it: Interest rates are nothing to write home about here. For example, a basic savings account will get you a measly 0.01% effective as of 9/18/17. Interest rates are variable and subject to change. A one-year CD will get you 0.02% unless you deposit $100,000 or more — then you get a whopping 0.05%. Despite its size, Chase doesn’t have branches in most of the Southeast and plains states. And while its product lineup is mostly impressive, you’re out of luck if you want a personal loan.
Best Bank for Availability: Wells Fargo
Wells Fargo isn’t far behind Chase when it comes to assets, having access to almost 10% of the U.S. market. Its acquisition of Wachovia in 2008 boosted its already-hefty retail-banking presence, making it one of the most accessible banks in the U.S.
Why it’s worth a look: With more than 6,300 branches as of June 2014, Wells Fargo has the most locations of any U.S. bank, and they are spread across nearly every region. Branches include several “stores within a store” — small locations inside of grocery stores, meant to make in-person banking more convenient. You’ll also have access to more than 12,000 ATMs and an impressive lineup of financial products including credit cards, personal loans, investments, and even insurance policies.
Wells Fargo can be more innovative on the loan side. They have special loan programs targeted at doctors, for instance. These programs used to be plentiful before 2008, and are now difficult to find.
Why you might want to skip it: Interest rates are also paltry at Wells Fargo, which offers the same APY on its basic savings account as Chase. A one-year CD will fetch 0.05% APY. Wells Fargo also notches mostly average marks for customer satisfaction.
Best Bank for Stability: BB&T
BB&T fares well in measures of financial stability — better than most of its larger competitors — while still maintaining solid marks in customer service, availability, and reach.
Why it’s worth a look: If the subprime mortgage crisis left you nervous about your bank’s financial health, BB&T notches the highest-possible 5-star rating from BauerFinancial, which analyzes banks’ regulatory filings. It also scored much better than many other large retail banks in an annual Forbes ranking that analyzes factors including the quality of a bank’s assets and the adequacy of its capital. BB&T also maintains solid customer satisfaction marks, particularly in regions where it has the most branches.
Why you might want to skip it: While BB&T remains one of the nation’s largest banks by assets, its nearly 1,900 branches are limited to the mid-Atlantic, Southeast, and Texas.
Best Online Banks
The banks in this section are online-only; they don’t have branches like the traditional banks above. These institutions focus mainly on basic checking and savings accounts, but if you’re a tech-savvy investor, we encourage you to check out The Simple Dollar’s best online brokers. Brokers such as T.D. Ameritrade and E*TRADE offer consumer banking products in addition to investment tools, letting you keep tabs on everything in one place.
Best Bank for High Interest Rates and Low Fees: Ally
Ally is a strong all-around performer in online-only banking, offering an impressive blend of low fees, high interest rates, and accessibility. Formerly known as GMAC Bank — part of General Motors’ financing division — Ally re-branded and switched gears in 2009 after it received a government bailout during the subprime mortgage crisis.
Why it’s worth a look: Ally’s savings account offers an impressive 1.15% APY with no maintenance fees or minimum balance, and the one-year CD will get you 1.05% APY with no minimum deposit. There are also no monthly maintenance fees for checking accounts. If you’re concerned about accessing your money, Ally allows you to use any ATM and reimburses the fees. In fact, Ally does an impressive job of making its fees easy to find and understand, and they’re typically much lower than the competition.
Why you might want to skip it: Ally is great for checking and savings, but if you’re looking for credit cards, most types of loans, and other products, you’re out of luck. Ally does offer auto loans, but you must go through a dealership — there is no way to apply online. Its customer reviews are also decidedly mixed.
Best Bank for Comprehensive Online Offerings: Discover Bank
Discover Bank boasts a bigger product lineup than many of its online-only rivals, and its longevity may comfort some online-banking skeptics. The company has added an array of financial services since launching the first Discover credit card in 1986.
Why it’s worth a look: Beyond typical deposit accounts such as checking, savings, and CDs, Discover also offers a lot more: IRAs; home, personal, and student loans; and an array of credit cards. You’ll be able to withdraw cash from a whopping 60,000 ATMs nationwide without paying a fee. Interest rates are competitive, though a bit lower than Ally’s, including 1.20% APY for savings and 1.50% APY for a one-year CD.
Why you might want to skip it: There is no minimum to open a savings account but there is a $2,500 to open a money market account or CD, while several competitors offer lower minimums or none at all. Account fees are also higher than at some other online-only banks, including a painful $30-per-day fee for insufficient funds.
Best Bank for Checking Only: Bank5 Connect
Convenient access to checking is essential, and we’ve been conditioned to accept paltry interest rates in exchange for keeping our money easy to access. Bank5 Connect bucks that trend in a notable way.
Why it’s worth a look: Bank5 Connect offers 0.76% APY on its basic checking account, a rate untouched by most competitors. You also won’t have to fork over a huge chunk of cash to open or maintain an account: All you’ll need is $10 to start and a $100 balance to start earning interest. There are no monthly maintenance fees. And if you’re wary of a bank you may not have heard of, don’t be: Bank5 Connect receives 5 stars from BauerFinancial, which analyzes a bank’s financial health. It also has excess-deposit insurance for accounts that exceed FDIC limits.
Why you might want to skip it: You’re limited to the basics here — checking, savings, and short-term CDs. And unlike Ally and Discover, Bank5 Connect doesn’t offer 24/7 customer service over the phone.
Traditional or Online Banks: Which is Best?
There are advantages and disadvantages to traditional and online banks, and only your priorities can dictate which method you’ll favor.
However, keep in mind that this doesn’t have to be an all-or-nothing question. For years, my husband and I have used a combination of both traditional and online banking. Enticed by a high interest rate, we opened our main savings account at one of the nation’s largest online-only banks, where we also have a checking account. However, we also maintain separate accounts at banks with local branches, too. We’ve created links between these accounts that make it easy to move deposits fairly seamlessly.
Why Would I Choose an Online Bank?
If you’re reasonably tech-savvy and want to keep a little more money in your pocket, online banking could be for you. Here’s why:
- Convenience: This is by far the biggest advantage to online banks. Open 24/7, online banks don’t require you to wait in line during business hours to open an account or make a deposit. Customer service is typically a phone call or a few clicks away, whatever the hour.
- Higher interest rates: Traditional banks typically have a lot of overhead — namely, the cost of leasing and operating physical locations — and they pass on the costs in the form of lower interest rates. Online-only banks offer low rates in part because they save money with less overhead.
- Lower fees: Online-only banks often have lower fees than traditional banks. Many have fully featured checking accounts with no monthly maintenance fee or minimum balance. Meanwhile, after years of free checking at my longtime traditional bank, they recently ruffled my feathers by requiring me to keep a minimum $1,500 balance to avoid a monthly fee of $11.
- Better online and mobile tools: This varies from bank to bank, but online-only banks typically offer a more seamless, comprehensive online-banking experience. FAQs are more complete, interest rates and fees are clearly stated, and tools such as loan payment calculators are readily available. Features such as online bill pay and account alerts are usually reliable and bug-free. In fact, I’ve never had a problem depositing checks with my smartphone when I’m using my online-only account; the times I’ve tried to use my traditional bank’s app to do the same, it hasn’t worked about half the time.
Why Would I Choose a Traditional Bank?
Still, there are compelling reasons to keep your traditional bank account, too — especially if you value service.
- Face-to-face customer service: Some customers still value banking with a real person, and that can go far beyond friendly chit-chat with a teller. Building a relationship with your bank is easier when you do business in person, and can be tremendously beneficial, especially if your needs are more complex or immediate. For example, my husband and I were able to get a last-minute, low-interest loan from our local bank when an error by our mortgage lender left us short-handed and threatened our closing date. Our existing relationship with that bank made the process a lot shorter and smoother than it would have been elsewhere, especially online.
- Wider range of products: As convenient as online banking is, it might not be ideal if you want to use a wide range of financial products at one institution. Traditional banks more commonly offer a big variety, from the basics (checking, savings, certificates of deposit, money market accounts) to more advanced investments, credit cards, and loans. Online-only banks may offer a fraction of these services, in part to keep fees down and rates up on basic accounts.
- Access to deposits: While online-only banks offer many convenient features, traditional banks often have a leg up when it comes to keeping your money more accessible. You may have a bigger, more readily available network of no-fee ATMs, and depositing a check directly with a teller often means same-day access to that cash. Depending on how you deposit your check with an online-only bank, you could be waiting a couple days or more to access that money.
One reason not to choose a traditional bank over an online-only bank is because you think it’s more secure. While news of data breaches is always sobering, consider that traditional banks are just as vulnerable. Powerful encryption methods protect you online, but information from your paper statements or other documents is ripe for the taking by anyone who picks through your garbage.
Five Things to Look For in a Bank
There are several factors to consider when you’re choosing where to safeguard your money. Here are five of the most important:
#1: Reasonable Fees
All banks charge a range of fees, so keep your eye on what’s really important — the stuff that can really add up. For most, that includes a monthly fee for checking accounts, which can amount to $10 or more at some banks. Look for free checking or a bank that will waive the fee if you have a certain minimum balance or monthly direct deposits.
Overdraft fees can also add up big time: Your bank may charge up to $30 or more a day if you try to withdraw more than is actually available in your account. Finally, you could be on the hook for more than $4 each time you use an out-of-network ATM.
If you’re concerned about being nickel and dimed, strongly consider online-only banks, which often have lower fees than traditional banks. Online banks are also often more transparent about fees, making the information easier to find on their websites.
#2: Convenient Access
The best bank in the world would lose its luster with slow deposits or tricky withdrawals. Take an honest look at your habits. For instance, do you need to deposit checks frequently, or do you mainly rely on direct deposit from your employer? It may take an online-only bank longer to make your funds available, but direct deposit typically eliminates this delay.
You’ll also want to look at how you typically withdraw cash. If you’re constantly hitting the ATM, be sure your bank has a big, convenient network to avoid fees. Some online-only banks even reimburse ATM fees since they don’t have networks of their own. And if you’re going to be using a lot of checks, be sure you have unlimited check writing.
Finally, if you like doing business in person, choose a bank with convenient locations and hours that mesh with your schedule. Frequent travelers may want to stick to a larger bank with branches spread nationwide, but a smaller regional bank or even a community bank can do the trick if you’re happy to stay close to your hometown.
#3: The Services You Need
The nation’s biggest banks offer a dizzying array of deposit accounts, investment products, loans, credit cards, and much more. Keeping your business in one spot can be convenient, but you also don’t want to pay a premium to help your bank maintain services you don’t use.
Take a realistic look at your needs. If you’re retiring and want a bank with a lot of investment options, you’ll probably want to look at larger, traditional institutions. If you’re a young professional who only needs basic checking and savings, you may want to look at online-only banks. And when the day comes that you need more, shop around.
It may make sense to do business at a handful of institutions to maximize the advantages of each one. And if you’re worried about keeping track of multiple accounts, budgeting tools such as Quicken can help you keep tabs on your cash by integrating with your accounts.
#4: Help Available How and When You Want It
Customer service can take a lot of forms these days. While you may envision speaking with a teller or a bank manager, it can also mean phone calls with customer service representatives, FAQs, and online chat sessions.
Obviously, if you want to do business in person and truly build a banking relationship, you’ll need a traditional bank. You may also want to consider size — you’re more likely to become a valued customer at a regional or local bank than a national megabank.
On the other hand, if you prefer to do business electronically, you may like an online-only bank. Just check for features such as 24/7 phone service, online chat, and FAQs to be sure you can get help when you do need it.
#5: High-Interest Savings Options
There are so many good high-yield savings accounts today that it makes little sense to park your money in an account that’s giving you 0.01% APY. There are several great options online that will get you closer to 1.0% APY.
Money market accounts and CDs are also likely to have higher interest rates online, but note that MMAs and CDs often have higher minimum deposits. CDs also require you to park your money for a certain amount of time before you can withdraw it without penalty.
How I Chose the Best Banks
Because traditional banks and online banks have such different strengths, I used very different criteria to evaluate them. Here’s a closer look:
When looking at traditional banks, I weighed measures of customer satisfaction most heavily — after all, personal service is one of the biggest reasons to remain with brick-and-mortar banks. I used ratings from the 2015 J.D. Power and Associates Retail Banking Study as well as the 2014 American Customer Satisfaction Index Finance and Insurance Report, when applicable.
Next, I looked at branch availability, judged by the number of branches a bank has according to the FDIC and whether the bank has a presence nationwide or in only one or two regions.
I also considered the bank’s product range. While all banks offer basics such as checking and savings, not all offer a wide range of loans (mortgages, auto loans, personal loans, student loans), credit cards, and investment vehicles such as IRAs, mutual funds, and annuities.
Finally, I considered the bank’s financial health, measured by BauerFinancial’s Bank Star Ratings. These ratings, which range from one to five stars, are based on the company’s independent analysis of regulatory filings that detail banks’ assets, profitability, and cash flow, among other data.
To qualify for evaluation as an online bank, the institution couldn’t have a brick-and-mortar branches. This prevents crossover between categories, since many traditional banks do offer varying degrees of online services.
Because high interest rates and low fees are the main advantages of online-only banks, these factors weighed most heavily in my analysis. I compared rates for basic savings accounts and one-year CDs across institutions. I also looked at checking account interest rates, but they were less of a consideration since you typically won’t be using a checking account to grow your money. I also compared fees and minimum balances, taking particular note of fees that are most likely to affect the greatest number of people, such as account maintenance fees and overdraft fees.
To round out my analysis, I considered customer service availability, including whether phone support is offered 24/7, how comprehensive the FAQs were, and whether online chat was an option. I also evaluated the number of financial products offered and how easy the bank’s website made it to find crucial information on rates and fees.
There’s No Best Bank for Everyone
One size doesn’t fit all in banking. One person may despise the anonymity of an online-only bank, while another can’t fathom the idea of waiting in line to do business with a teller.
You may even find that you’re best served by multiple accounts: A high-yield, online-only savings account might be great for parking and growing money you still want periodic access to, while a checking account at your local bank may still be your most convenient option for everyday banking. I’ve used that formula for several years now and it has served me well.
If you’d like a larger traditional bank, Chase Total Checking® and Chase Savings℠ tops our recommendations because it offers the best blend of products, service, and availability. If you’re ready to look into online-only banks, Ally should be one of your first stops because of its high interest rates and low fees.
If you’d like further guidance, The Simple Dollar has zeroed in on the best savings accounts and the best free checking accounts. We also offer guides on the best money market accounts and how to find the best CD rates.