Start with what you actually use
The best bank for you depends on how you use money, not on which bank has the most branches or the loudest ads. Before you compare banks, write down what matters to you: Do you need to deposit checks by phone? Do you use ATMs three times a week? Do you keep less than $500 in the account most months, or more than $5,000? Do you travel and need ATM access in other states? Do you overdraft sometimes? Do you want to talk to a human on the phone, or do you handle everything online?
A bank that works for someone who lives in one city and never travels is wrong for someone who moves between states. A bank that charges $12 per overdraft is fine if you never overdraft; it is expensive if you do it twice a month. The bank with the most ATMs in your neighborhood might have the worst online app. You cannot know which bank is best until you know what you need.
Key Takeaways
- Write down how you actually use your checking account — how often you overdraft, whether you deposit checks by phone, how many ATMs you use per month — before you look at any bank.
- Monthly fees, overdraft fees, and minimum balance requirements vary widely between banks and can cost you $100 to $300 per year if they do not match your habits.
- Online banks usually have no monthly fees and no minimum balance, but they have no physical branches and may not let you deposit cash.
- Credit unions often have lower fees and better customer service than big banks, but you have to be a member and their ATM networks are smaller.
- Test the bank's website or app before you open an account — try to deposit a check, transfer money, and find an ATM near your home.
Compare fees across the banks you are considering
Monthly maintenance fees are the easiest cost to see, but they are not the only one. A bank with no monthly fee but a $35 overdraft charge costs you more than a bank with a $10 monthly fee if you overdraft twice a year. A bank that charges $3 per out-of-network ATM withdrawal costs you $36 per year if you use an out-of-network ATM once a month.
Make a table with the banks you are thinking about and list these costs for each one:
| Cost | Bank A | Bank B | Bank C |
|---|---|---|---|
| Monthly maintenance fee | |||
| Overdraft fee (per overdraft) | |||
| Minimum balance to avoid fees | |||
| Out-of-network ATM fee | |||
| Wire transfer fee | |||
| Check printing cost |
Then multiply each fee by how many times per year you think you will pay it. A $35 overdraft fee times two overdrafts per year is $70. A $3 ATM fee times 12 times per year is $36. Add up the total cost for each bank and pick the cheapest one for your actual behavior.
Decide between a big bank, online bank, or credit union
Big banks like Chase, Bank of America, and Wells Fargo have physical branches and ATMs everywhere, but they charge monthly fees and overdraft fees. Most require a minimum balance to avoid the monthly fee — often $500 to $1,500. If you fall below that balance, you pay $10 to $15 per month. If you overdraft, you pay $30 to $35 per overdraft. If you use an ATM that is not theirs, you pay $2 to $3 per transaction.
Online banks like Ally, Charles Schwab, and Chime have no physical branches, but they have no monthly fees and no minimum balance. They refund out-of-network ATM fees or give you access to a large ATM network for free. The catch: you cannot deposit cash in person, and you have to deposit checks by phone or mobile app. If you never use cash and you do not need to talk to someone in a branch, an online bank is usually cheaper.
Credit unions are member-owned banks that usually charge lower fees than big banks and have better customer service. You have to be a member — sometimes you have to live or work in a certain area, or work for a certain employer, or join a group that sponsors the credit union. Credit unions have fewer ATMs and branches than big banks, but many are part of shared branching networks that let you use other credit unions' branches for free. If you meet the membership requirement and you do not need a huge ATM network, a credit union is often a good choice.
Test the bank's website and app before you open an account
A bank with low fees is useless if you cannot figure out how to use it. Before you open an account, spend 10 minutes on the bank's website or download the app and try to do the things you do most often. Can you transfer money between accounts? Can you see your balance? Can you find an ATM near your home? If the bank offers mobile check deposit, try to understand how it works — some banks take three to five business days to clear a check you deposit by phone, and some take longer.
Read the reviews on the app store, but focus on recent reviews and look for patterns. One person complaining that the app crashed is not a pattern. Twenty people in the last month saying the app crashes is a pattern. Look for complaints about customer service — how long does it take to reach someone, and can you reach them by phone or only by chat?
Know what happens if you overdraft
Overdraft protection is not the same as overdraft fees. Overdraft protection means the bank will cover a transaction that would overdraw your account — they lend you the money for a few seconds so the transaction goes through, then they charge you a fee. Some banks charge $35 per overdraft. Some charge $3. Some charge nothing.
You can usually turn overdraft protection off in your account settings. If you turn it off, the bank will decline transactions that would overdraw your account instead of charging you a fee. This is safer if you overdraft often, because you will not rack up $100 in overdraft fees in a single day. It is less convenient if you overdraft rarely and you need the transaction to go through.
Ask the bank what their overdraft policy is before you open an account. Some banks let you link a savings account or a credit card to your checking account so that if you overdraft, they pull money from the linked account instead of charging you a fee. This is the cheapest option if the bank offers it.
Check whether the bank is insured by the FDIC
The Federal Deposit Insurance Corporation (FDIC) insures deposits at banks up to $250,000 per account holder per bank. This means if the bank fails, the government will give you your money back up to $250,000. Almost all banks are FDIC-insured, but not all of them advertise it. Before you open an account, go to the FDIC website and search for the bank's name to confirm it is insured. If a bank is not FDIC-insured, do not put your money there.
Credit unions are insured by the National Credit Union Administration (NCUA), which works the same way — up to $250,000 per account holder per credit union. Check the NCUA website to confirm a credit union is insured before you open an account.
Frequently Asked Questions
Can I have a checking account at more than one bank?
Yes. Many people have a checking account at a big bank for in-person deposits and a checking account at an online bank for lower fees. You can transfer money between them for free using ACH transfers, which usually take one to three business days. This lets you use the best features of each bank.
What if I have bad credit or I am on ChexSystems?
ChexSystems is a database that banks use to check whether you have overdrafted or bounced checks at other banks. Some banks will not open an account for you if you are on ChexSystems. Online banks and credit unions are sometimes more willing to open accounts for people with banking history problems. Call the bank and ask whether they check ChexSystems before you apply.
Do I need direct deposit to avoid monthly fees?
Some banks waive the monthly fee if you set up direct deposit, but not all of them. Check the bank's fee schedule to see whether direct deposit is required. If you do not have direct deposit and the bank requires it to waive the fee, that bank is not a good choice for you.
What is the difference between a checking account and a savings account?
A checking account is for money you use regularly — you can write checks, use a debit card, and make unlimited transfers. A savings account is for money you want to keep — it usually has a lower interest rate and limits how many times per month you can withdraw. Most people have both at the same bank.
Should I pick a bank based on interest rates?
Checking accounts earn almost no interest at any bank — usually 0.01% to 0.05% per year. The difference between banks is so small that it does not matter. Pick a checking account based on fees and convenience, not interest rates. If you want to earn interest on your savings, open a separate high-yield savings account at an online bank.