The best fit for you will depend on how you use banking services and your priorities.
Start by looking at your transactions for the last three months or so. What was the lowest balance in your checking and savings accounts over that time? If you constantly run on fumes or close to it, you’ll want accounts with low minimum balance requirements or that waive minimums when you arrange direct deposit of your paycheck. (My credit union requires a $1 minimum for its basic checking account. Big banks may require a $500 to $1,000 minimum balance to avoid a fee unless you have direct deposit.)
Cast a wide net. Don’t limit your search to name-brand banks. Community banks and credit unions can be good options as well. Move Your Money can help you find top-rated community banks by ZIP code, while Find a Credit Union and CULookup offer similar services for CUs. Community banks are covered by the FDIC insurance that applies to bigger banks, and most credit unions are covered by the National Credit Union Share Insurance Fund, which like the FDIC is backed by the full faith and credit of the U.S. government.
Check your target institution’s Web site for the closest branches and ATMs. You can always get extra cash at a grocery store with a debit card, but most people like to have a fee-free ATM and a branch or two close to where they live or work. Credit unions usually belong to the Co-Op Network, giving you access to more than 28,000 fee-free ATMs across the country.
Also check interest rates for checking and savings account. Getting any interest on your checking at big banks typically requires a huge balance ($10,000 and up), but some community banks offer decent rates on so-called rewards checking accounts. Get all the details before you sign up, since a certain number of transactions and a minimum balance are typically required.
Savings account rates vary as well. My big-bank savings account offers a fraction of 1%, while my credit union currently offers a 7% return on the first $500 deposited.
Test their customer service. Don’t just check them out on the Web. Call and talk to a human to ask questions, so you can see how you’re treated. Then, before you commit, visit a branch and ask some of the same questions again in person. What an institution promises and what it actually delivers in customer service can be worlds apart, and there’s nothing like face-to-face contact to help you decide.
What to ask (and make sure to write down the answers so you can compare your options):
- What are the minimum balance requirements (if any) for each account? What monthly fee will I pay if my account goes below the minimum or if there is no fee-free minimum?
- Do you reimburse for transactions made at other banks’ ATMs? If so, how many fee-free transactions can I make each month?
- Do you charge to talk to a teller? If so, how much?
- Do you offer online bill pay for free? Is there a limit on the number of bills I can pay?
- Do you charge for paper statements? If so, how much?
- What do you charge for transfers to outside accounts?
- Do you offer overdraft protection? How much does it cost? (What you want is true overdraft, which links your checking account to a savings account, line of credit or credit card in case a transaction exceeds your available balance. Don’t settle for “courtesy overdraft” or “bounce protection,” which can cost you a fortune in bounced-transaction fees.)
- If you use Quicken, QuickBooks or other personal finance software, ask about fees for those services.
- If you frequently send money out of the country, find out how much is charged for that service.
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