Start with what you actually use your account for

The best bank for you depends on how you move money, not on which bank has the most branches or the loudest advertising. Before you compare banks, write down what you do with a checking account: Do you deposit checks by phone? Do you need to withdraw cash multiple times a week? Do you send money to other people regularly? Do you keep a low balance or a high one? Do you overdraft sometimes? The answers to these questions matter more than the bank's name.

A bank that charges $35 per overdraft is a disaster if you overdraft twice a month, but irrelevant if you never do. A bank with no branches is fine if you never need to walk into a building, but frustrating if you deposit cash constantly. Start by listing the things you actually do, then find the bank that doesn't penalize you for doing them.

Key Takeaways

  • Match the bank to your habits: if you overdraft often, prioritize low overdraft fees or overdraft protection; if you deposit cash frequently, you need branch access or a bank that reimburses ATM fees.
  • Monthly maintenance fees, minimum balance requirements, and per-transaction charges vary widely—read the fee schedule before you open an account, not after.
  • Online banks typically have no monthly fees and higher savings rates, but no physical branches and slower cash deposits; traditional banks offer branches and immediate cash access but often charge monthly fees.
  • FDIC insurance protects your money up to $250,000 per account type at any bank, whether online or brick-and-mortar, so bank size does not determine safety.
  • You can have accounts at multiple banks—many people keep a checking account at one bank and a savings account at another to get the best rates and lowest fees.

Understand the fee structure before you sign up

Banks make money from fees, and the fees vary dramatically. A monthly maintenance fee (also called a service charge) can range from $0 to $15 per month at different banks. Some banks waive it if you keep a minimum balance—$500, $1,000, or $2,500 depending on the bank—or if you set up direct deposit. Others charge it no matter what. Over a year, a $12 monthly fee costs $144; over five years, it costs $720. That money comes out of your account whether you use it or not.

Overdraft fees are the second major cost. When you spend more than you have, the bank can charge $25 to $35 per overdraft, and some banks charge multiple times per day. If you overdraft twice a month, that is $600 to $840 per year. Some banks offer overdraft protection, which links your checking account to a savings account or credit line and transfers money automatically when you run short—usually for a smaller fee or no fee at all. Others offer a grace period or simply decline the transaction instead of charging you.

Read the fee schedule on the bank's website before you open an account. Look for: monthly maintenance fee, overdraft fee, insufficient funds fee, ATM fees, wire transfer fees, and stop-payment fees. If the bank does not list fees clearly online, call and ask. A bank that hides its fees is a bank to avoid.

Decide between online banks and traditional banks

Online banks (like Ally, Charles Schwab, or Discover) have no physical branches. You deposit checks by taking a photo on your phone, you withdraw cash at ATMs, and you talk to customer service by phone or chat. In return, they have almost no overhead, so they charge no monthly fees and pay higher interest on savings accounts. If you rarely need cash and you are comfortable with a phone call instead of walking into a building, an online bank usually costs you less money.

Traditional banks (like Chase, Bank of America, or Wells Fargo) have branches and ATMs in your neighborhood. You can walk in to deposit cash, talk to a person face-to-face, and get a debit card immediately. The tradeoff is that they often charge monthly fees, have lower savings rates, and may require a higher minimum balance. They are worth it if you deposit cash regularly, need immediate access to a teller, or value the ability to sit down with someone in person.

A third option: credit unions are member-owned financial institutions that often charge lower fees and pay better rates than traditional banks. You have to be a member (usually by working for a certain employer, living in a certain area, or belonging to a certain organization), but if you may have access to, a credit union is often cheaper than a bank.

Compare interest rates on savings accounts

If you keep money in a savings account, the interest rate matters. A savings account at a traditional bank might pay 0.01% annual interest; an online bank might pay 4% or 5%. On $10,000, that difference is $1 per year versus $400 to $500 per year. The rate changes based on what the Federal Reserve does with interest rates, so check the current rate when you are ready to open an account, not six months earlier.

Some banks offer high-yield savings accounts (also called money market accounts) that pay significantly more interest than a regular savings account. The tradeoff is usually a higher minimum balance or limits on how many times per month you can withdraw money. If you are saving money and not touching it, a high-yield account is almost always better than a regular savings account.

Interest rates are not may provide—the bank can lower them at any time. But if a bank lowers its rate and you do not like it, you can move your money to a different bank. There is no penalty for switching savings accounts.

Check whether the bank is FDIC-insured

The Federal Deposit Insurance Corporation (FDIC) insures deposits at banks. If a bank fails, the FDIC pays you back up to $250,000 per account type. This means your money is safe whether the bank is huge or tiny, online or brick-and-mortar. Almost every bank you have heard of is FDIC-insured; you can check by searching the bank's name on the FDIC's website.

The $250,000 limit applies per account type per bank. A checking account and a savings account at the same bank are two separate account types, so you are covered up to $250,000 in each. If you have more than $250,000 to deposit, you can split it across multiple banks or multiple account types to stay fully insured.

Test customer service before you commit

Call or chat with the bank's customer service and ask a question—anything from "What is your overdraft policy?" to "How do I deposit a check?" Pay attention to how long you wait, whether the person answers your question clearly, and whether they seem to know what they are talking about. If customer service is slow or unhelpful when you are just asking a question, it will be worse when you have a real problem.

Read recent reviews on the bank's website or on independent sites, but take them with skepticism. People who are angry write reviews; people who are satisfied usually do not. Look for patterns—if dozens of reviews say "I could not reach customer service for three days," that is a real problem. If one review says "the teller was rude," it might just be one bad day.

You do not have to stay at one bank

Many people keep accounts at two or three banks. You might have a checking account at a traditional bank because you deposit cash there, and a savings account at an online bank because it pays 4% interest. You might have a second checking account at a credit union for emergencies. There is no rule that says you have to use one bank for everything. If one bank is better for checking and another is better for savings, use both.

Switching banks takes about 15 minutes to set up, but moving all your automatic payments and direct deposits takes longer. If you are opening a second account to test it out, keep your old account open for a month or two while you make sure everything works. Once you are confident, you can close the old account.

Frequently Asked Questions

What is the difference between a checking account and a savings account?

A checking account is for money you spend regularly—you get a debit card, you write checks, you pay bills. A savings account is for money you are keeping—it earns interest and usually has limits on how many times per month you can withdraw. Most people have both at the same bank, but you can have them at different banks if one bank has better checking and another has better savings rates.

Do I need a minimum balance?

It depends on the bank. Some banks require a minimum balance to avoid a monthly fee; others charge a fee no matter what. Some banks waive the fee if you set up direct deposit instead. Read the fee schedule or call and ask before you open an account—do not assume.

What happens if I overdraft my account?

The bank can charge you an overdraft fee (usually $25 to $35) and decline the transaction, or it can cover the transaction and charge you a fee. Some banks offer overdraft protection, which automatically transfers money from a savings account or credit line to cover the shortfall. Ask your bank what it does before you overdraft.

Can I move my money to a different bank if I change my mind?

Yes. You can close an account at any time with no penalty. Moving your direct deposits and automatic payments takes a few days, but the money itself moves instantly. Many banks will even help you transfer money from your old bank as part of the sign-up process.

Is my money safe at an online bank?

Yes, as long as the bank is FDIC-insured. You can check by searching the bank's name on the FDIC website. Your money is insured up to $250,000 per account type, whether the bank has branches or not.