Things to Look for When Choosing a Bank

August 4, 2014

When it comes to banks, the playing field is far from equal. In fact, the variation in fee structure and offerings can be quite substantial. And, if you’re anything like me, you might not realize the difference until you get slammed with a bill pay fee or low balance charge a few months into the banking relationship. Talk about frustrating.

So if you’re ready to break up with your current bank, or you’re still on the fence about it, try doing a little comparison shopping. That little bit of leg work can go a long way.

Here are a few things to keep an eye out for.

Hidden (or Not So Hidden) Fees

There used to be just a select few banks that didn’t offer free checking. Now you see advertisements for free checking that make it seem like a novelty – and unfortunately it’s trending that way. According to Bankrate, in 2009, 76% of banks offered free checking accounts. In 2013, that number was at a dismal 38%. On the other hand, 2014 data shows that 72% of credit unions still offer free checking – down slightly from 2010 data (78%), but still more impressive than banks.

Some banks might offer free checking with the caveat that you have money direct deposited into your account every month, or you keep your account at a certain balance. Make sure you can easily meet those requirements every month before signing up for an account.

What else should you look out for? Overdraft fees – those awful things that can turn a $2 cup of coffee into a $37 cup of coffee if you’re not careful. These fees can vary from bank to bank – some charge $35 per overdraft or $10 to transfer money from a linked account to cover the purchase. Or you can opt out from the protection altogether and just have the transaction declined at the register.

Think about the things you do often that might come with a fee attached – bill pay, account transfers, overdrawing your account – and do a thorough bank comparison.


There are few things as frustrating as paying to access your money, or not being able to move things around as much as you’d like. This is when it’s important to know your banking habits and what may be important to you.

If you make frequent visits to the ATM, it’s important to know if, or how much, your bank charges to use out-of-network ATMs. Many online banks offer unlimited ATM reimbursements, making it incredibly convenient no matter where you may be. Others might charge $2-$3 per out-of-network ATM transaction – which could add up quickly.

If your bank does charge ATM fees, or if you are required to do many transactions inside a bank branch, are they in a location that’s convenient to you? Or will it be a trek just to access your money?

Do you do much of your banking through an app if it’s available to you? I use my Ally app to make deposits, check my balance, and move money between accounts. This is far more my style than going into a branch and talking to a teller (something that’s not even available with Ally).

What’s your banking style?


When a bank is FDIC (Federal Deposit Insurance Corporation) insured, your account would be reimbursed in the case of a bank failure up to $250,000. But not all banks are FDIC insured.

Before selecting a bank, especially a lesser-known online bank, make sure you check the status of the institution by looking for the familiar FDIC logo, or running it through the FDIC database.  The FDIC website can also help you determine the financial health of an organization and if they are currently being investigated for anything.

Products and Services

Some people like to have all of their financial needs met with one organization. Others (like myself) have accounts spread among different banks and vendors. What works best for you? Do you want to be able to get a mortgage through the same institution that houses your checking and savings accounts? This approach may take more research since you are looking for a one stop shop, but if that’s the approach you’re looking for, then go for it.

Check out JD Power and Associates 2014 Retail Bank Ratings for ratings on everything from product offerings to account activities.

Also, while interest rates at most banks are dismal, some do offer a little more return than others. Here’s a list of the best interest rates currently available.