How to Pick the Right Bank for You

Banking is a concept that has been around since the invention of currency and trading. People don’t want to hold onto their own money when it’s convenient to store it in a central location. Now, banks offer a wide range of products and services beyond storing cash. There are tons of topics around banking, but today we’ll focus on how to pick the right bank for you.

Deciding what you need

The first step in determining the right bank is understanding what you need. Different people need different services, so there’s no one-size fits all for banking.

For this article, we’re going to be focused on savings accounts, such as the high yield one I use for my emergency fund. 

A few things to consider are:

• Wealth

• Liquidity

• Ease of Use

Wealth

High wealth individuals have different banking needs than someone just starting out. One thing to consider is that most bank accounts are FDIC insured up to $250,000. That means that if the bank fails, the government insures the account up to a quarter million. If you have more than $250,000 that you want to keep in a cash account, you’ll be advised to split it between accounts. If you find yourself holding onto that much cash for long periods of time, you should catch up with a financial advisor to see if that’s the best use of your money.

Liquidity

How likely are you to need your money ASAP? If you want access to an ATM or be able to walk into a branch and talk to a banker, you’ll want to choose a bank that has branches near you. On a related note, if you travel a lot, you might want to consider going with a national bank. A bank like Chase will be all over any mid-sized city, but a small credit union probably won’t have a branch across the country.

Ease of Use

Do you want to bank from your phone? Or do you like to go into a branch? All big banks and many smaller ones offer mobil banking. I personally use my mobile check deposit all the time, if I moved to a small bank without it, I’d miss it. Additionally, many banks offer other online or mobile perks such as credit monitoring right in their app.

Once you’ve thought about some of these things, you can start comparing banks. There are lots of websites out there like Nerd Wallet that do this for you, but we’ll break it down here too.

Picking the Right Bank

Interest rate: The rate the bank will pay you to keep your money there. High yield savings accounts are currently at about 1.85% and rising. Traditional banks are usually around .01%. You can make 185 times more by picking a high yield account.

Account Minimums: Most banks have some kind of account minimum. They want you to keep a certain amount of money in your account. Often times they’ll waive the minimum fees if you meet other requirements such as direct deposit.

One last consideration: 

Banks often run promotions for opening new accounts. If you’re thinking of opening up a bank account, do a quick google search first to see if there are any new customer offers. I got $300 for opening my checking account with Chase and setting up direct deposit (which I needed anyway)!