How To Choose a Bank

When it comes to banks, you’ve got options. You could choose a regional or national bank. You could even go with a credit union.

What matters most is choosing a bank that suits your needs and keeps your money secure and accessible. Once you choose yours, chances are you won’t be changing anytime soon.

Here’s how to choose a bank you’re not going to regret (or want to leave) later.

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Key Takeaways

• Start with federal insurance. Pick an FDIC-insured bank or NCUA-insured credit union, which protects deposits up to $250,000 per depositor, per institution, per ownership category.

• Know what insurance actually covers. FDIC and NCUA coverage protects you if the institution fails — not against fraud or scams, which fall under other consumer protections.

• Match the accounts to your goals. A checking account handles everyday spending, while a savings account, high-yield savings account, money market account or CD helps your money grow.

Summary generated by AI, verified by MoneyLion editors

1. Consider the Bank Account Options

Consider your everyday spending habits and your financial goals. A checking account is useful for everyday spending and bill pay. A savings account is good if you’re trying to build an emergency fund or save up for something major, like a down payment for a house. Chances are, you’ll benefit from having both.

2. Think About Your Longer-Term Goals

A traditional checking and savings account might not be enough for everyone. Depending on your long-term goals, you might need another (or even a different) type of account instead.

Other accounts to consider include:

• High-yield savings account (HYSA): While traditional savings accounts often offer APYs below 1.00%, HYSAs currently have a rate cap of 4.38%, according to the FDIC. The higher the rate, the faster the money in the account can grow.

• Money market account: Like HYSAs, money market accounts usually have higher APYs. But like checking accounts, they also come with a debit card and let you write checks. The downside is they often require you to keep a minimum account balance if you don’t want to get charged a fee.

• Certificate of deposit (CD): CDs are a type of high-yield account. With one, you deposit a set amount of money for a period of time (usually six months to five years). The balance earns interest during that time. At the end, you’ll receive that interest plus the initial balance. If you withdraw money early, you’ll be charged a fee.

3. Look for Federal Insurance

Choose a federally insured bank or credit union.

The FDIC insures many U.S. bank accounts on balances up to $250,000. It also protects against loss from bank closures.

The National Credit Union Share Insurance Fund works similarly, but for credit unions. It insures up to $250,000 per individual depositor.

4. Be Wary of Fees

Banks can charge all sorts of fees, like:

• Minimum balance fee

• Monthly account maintenance fee (checking and savings)

• Overdraft fees

• Insufficient funds fees

• Wire transfer fees

• International transaction fees

• Check or debit card ordering fees

• ATM fees

Some fees are charged once or under specific circumstances, like if you use an out-of-network ATM. Others, like the monthly maintenance fee, are recurring. Certain ones are avoidable, which is good news for your money.

For example, you won’t be charged a minimum balance fee if your account balance never drops too low. You won’t face an overdraft fee if you have the necessary funds in your account, or if you set up overdraft protection. Some banks will waive the monthly maintenance fee if you set up direct deposit or link your checking and savings accounts.

Knowing the bank fees ahead of time can save you a lot of hassle. Sometimes, though, your best bet is to choose a bank with minimal to no fees in the first place.

5. Look for Higher Interest Rates

If your main goal is to keep your money secure while being able to spend it for everyday purposes, you might not be that concerned about interest rates. But if you’re planning to also make your money grow, a higher-yield account comes in handy.

Compare banks to see what kinds of Annual Percentage Yields (APYs) they offer. The funds in a savings account with 1.00% APY won’t grow as quickly as those in a 4.00% APY account.

Some banks will even offer interest-bearing checking accounts. While they usually have lower APYs than savings accounts, even a little earned interest doesn’t hurt.

6. Consider the Convenience Factor

When it comes to choosing a bank, you’ve got three main options:

• Brick-and-mortar (most traditional)

• Digital (online-only)

• Hybrid (online and in-person options)

Traditional banks have physical branches, which can be convenient if you live nearby. Many of these institutions have also adopted online banking.

But there are also online-only banks. These ones don’t have physical branches you can visit. Everything is done digitally. These online banks usually offer all the same features except the in-person ones. The biggest benefit is that they also tend to have fewer fees and are more readily accessible wherever you live.

7. Check the Bank’s Reputation

Even if a bank claims to be FDIC-insured, it doesn’t hurt to check. You can verify their current insured status using the FDIC’s BankFind Suite tool. For credit unions, use the NCUA’s Find a Credit Union tool.

In addition to being federally insured, look for banks with a positive online reputation. A few ways to do this are through the:

• Consumer Financial Protection Bureau (CFPB)

• Trustpilot

• Better Business Bureau (BBB)

On sites like the BBB, you can also see what current and past members are saying about the institution. Be wary of any persistent or major complaints, such as those about account security, excessive fees or poor customer service.

8. Check the Customer Service

Even online-only banks should still have a number you can call if you need help with something. Look for banks with 24/7 support and convenient phone and online access. If you’d prefer the in-person route, choose one with physical branches that are open when you might need them most.

9. Consider Other Features and Products

Part of choosing the right bank means understanding the other features and products it has, like:

• Mobile banking app you can access from your smartphone

• Mobile check deposit and bill pay

• Free online budgeting tools

• Free online credit score tracking

• Real-time alerts or notifications on overdrafts, transactions, etc.

• Cash-back rewards (credit or debit)

• Credit cards or loans (e.g. personal, mortgage, auto)

• Investment or insurance products

• Service fee waivers

• Direct deposit

• Overdraft protection between accounts

• Out-of-network ATM fee reimbursement

• One-time welcome offer for opening an account

Some of these features are standard these days, but not all banks offer ones like cash-back or free online financial tools. When choosing a bank, think about the tools or products you’re most likely to benefit from. This can help you make the best decision possible.

The Bottom Line

Choosing the right bank involves a bit of shopping around. It should be federally insured with minimal to no fees (or fee waivers). Ideally, it will also offer multiple account options, higher APYs, great customer service, convenience and other security features like real-time alerts. It should also match your spending habits and financial goals so you don’t end up needing to make a switch when you’d rather not.

Consider your must-have features alongside what you’re willing to go without. Try comparing three to five banks (and credit unions) so you can make an informed decision.

FAQ

What are three things to consider when choosing a bank?

Make sure the bank is FDIC-insured on balances up to $250,000. It should also have the right types of accounts for you, like a checking and savings account. And it needs to be convenient enough for you to use without hassle.

What are five bank accounts everyone should have?

It depends on the person's needs, but you should ideally have a checking and a savings account. You might also want a separate savings account for an emergency fund. A certificate of deposit or money market account can also be useful if you’re looking to grow your money over time.

Is a bank or a credit union better?

Credit unions may be better if you’re looking for more personalized service and a stronger sense of community. Some credit unions have lower fees and higher APYs than traditional banks, but that’s not always the case. However, you may want to go with a credit union if you’re planning to take out a future loan and want lower rates.

How many banks can you have?

You can open as many checking and savings accounts at as many different banks and credit unions as you’d like. It might even be smart to have separate banks for personal and business transactions. Just know that you’ll need to keep aware of each bank’s fees, restrictions and requirements.

What’s the safest bank?

The safest bank is one that’s federally insured. Banks that also offer fraud protection and real-time alerts on account activity are generally considered safer as well.

Photo Credit: PeopleImages/Getty Images

Key Terms

• FDIC insurance — Federal coverage protecting bank deposits up to $250,000 per depositor, per institution, per ownership category, in the event the bank fails.

• NCUA insurance — The credit union equivalent of FDIC coverage, on the same $250,000 terms.

• High-yield savings account (HYSA) — A savings account, usually from an online bank, that pays far above the national average rate.

• Money market account (MMA) — An insured deposit account that pays interest and often adds check-writing and debit card access.

• Certificate of deposit (CD) — A deposit account paying a fixed rate for a set term, with a penalty for early withdrawal.

• Annual percentage yield (APY) — The yearly return on a deposit including compounding — the number to compare across banks.

• Overdraft protection — A service that links accounts or a line of credit to cover transactions that would otherwise overdraw your balance.

• Brick-and-mortar bank — A traditional bank with physical branches, as opposed to an online-only or hybrid bank.

Sources

• FDIC — Safeguarding the Nation's Savings: Deposit Insurance

• FDIC — National Rates and Rate Caps (July 2026)

• FDIC — BankFind Suite (verify a bank's insured status)

• OCC HelpWithMyBank.gov — Is check fraud covered by the bank's insurance?

Summary generated by AI, verified by MoneyLion editors