How To Choose a Bank in 9 Steps

Choosing the right bank comes down to matching your needs for account types, fees, interest rates and convenience, while making sure your money is protected by federal deposit insurance. Options range from national and regional banks to a bank vs. credit union comparison worth considering, and the right fit is one you probably won't need to switch from anytime soon.

Here's how to choose a bank you won't regret later.

Key Takeaways

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

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

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

• Watch for avoidable fees: Minimum balance, overdraft and maintenance fees can often be avoided by choosing the right account and habits.

• Compare annual percentage yields (APYs) before you commit: The national average savings rate was just 0.38% in July 2026, so shopping around can make a real difference.

Summary generated by AI, verified by MoneyLion editors.

What To Look for When Choosing a Bank

Before diving into the details, here's the short version of what matters most:

• Federal insurance: Choose FDIC coverage for banks or NCUA coverage for credit unions

• Account types: Choose accounts that match how you spend and save

• Fees: Look for a fee schedule you can live with or avoid altogether

• Interest rates: Look for competitive rates on the balances you're growing

• Convenience: Find an institution that fits how you prefer to bank, in person or online

Comparing Common Account Types

1. Consider the Bank Account Options

Start with your everyday spending habits and financial goals. A checking account is useful for everyday spending and bill pay. A savings account is good if you're building an emergency fund or saving for something major, like a down payment on 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 goals, you might want another type of account, too. Other accounts to consider include:

• High-yield savings account (HYSA): The national average savings rate was 0.38% in July 2026, according to FDIC data, while competitive HYSAs often pay several times that. The higher the rate, the faster your money can grow.

If you're weighing a dedicated high-yield option as part of this step, MoneyLion Save is one account built for exactly this comparison: It currently offers up to 3.88% APY with a MoneyLion One membership, or 2% APY without one, with no minimum deposit and no minimum balance required to earn interest.

Since MoneyLion is a financial technology company and not a bank, funds are held at Pathward, N.A., Member FDIC. APY is variable and accurate as of its most recent update, so confirm the current rate in the app before you open an account.

• Money market account: Like HYSAs, money market accounts usually have higher APYs. But like checking accounts, they also often come with a debit card and check-writing access. The downside is they often require you to keep a minimum account balance if you want to avoid a fee.

• Certificate of deposit (CD): A CD is a fixed-rate account. With one, you deposit a set amount of money for a period of time, usually three months to five years or more. The balance earns interest during that time, and at the end, you'll receive that interest plus the initial balance. If you withdraw money early, you'll typically be charged a penalty.

3. Look for Federal Insurance

Choose a federally insured bank or credit union. The FDIC insures qualifying deposits at insured banks up to $250,000 per depositor, per insured bank, per ownership category, protecting you against loss if the bank fails.

The NCUA provides similar protection for credit unions through the National Credit Union Share Insurance Fund, generally insuring deposits up to $250,000 per member-owner, per federally insured credit union, per ownership category.

Keep in mind what this insurance doesn't cover. FDIC and NCUA protection applies only to deposits, not investments like stocks, bonds or money market funds, even if you bought them through your bank. It also doesn't cover theft, fraud or scams. Those situations fall under separate consumer protections, like Regulation E for qualifying unauthorized electronic transfers, though not every scam or authorized payment is covered.

4. Be Wary of Fees

Banks can charge a range of fees, including these common ones:

• Minimum balance fee: Charged when your balance drops below a required amount

• Monthly maintenance fee: A recurring charge on some checking and savings accounts

• Overdraft fee: Charged when the bank covers a transaction that exceeds your balance

• Insufficient funds fee: Charged when a transaction is declined for lack of funds

• Wire transfer fee: Charged for sending or receiving wires

• International transaction fee: Charged on purchases or withdrawals abroad

• Check or debit card ordering fee: Charged for new checks or replacement cards

• ATM fee: Charged for using an out-of-network ATM

Some fees are charged once or only in specific situations, like using an out-of-network ATM. Others, like a monthly maintenance fee, recur. Many are avoidable.

For example, you won't pay a minimum balance fee if your balance stays above the required amount. You can avoid overdraft fees by keeping enough money in your account or setting up overdraft protection. Some banks also waive the monthly maintenance fee if you set up direct deposit or link your checking and savings accounts.

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

MoneyLion offers a service to help you find personal loan offers. Based on the information you provide, you can get matched with offers for up to $100,000 from our top providers. You can compare rates, terms and fees from different lenders and choose the best offer for you.

5. Look for Higher Interest Rates

If your main goal is to keep your money secure and available for everyday spending, you might not care as much about interest rates. But if you also want your money to grow, a higher-yield account comes in handy.

Compare banks to see what kinds of APYs they offer. The funds in a savings account with a 1% APY won't grow as quickly as those in a hypothetical account earning 4% APY. Actual rates vary by bank and change often, so check current numbers rather than assuming any example rate is typical.

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 also offer online banking.

But there are also online-only banks. These 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 accessible wherever you live.

7. Check the Bank's Reputation

Even if a bank says it's FDIC-insured, it doesn't hurt to check. You can verify a bank's insured status with the FDIC's BankFind Suite tool, and 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. You can check them through:

• Consumer Financial Protection Bureau (CFPB)

• Trustpilot

• Better Business Bureau (BBB)

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

8. Check the Customer Service

Even online-only banks should have a phone number you can call for help. Look for banks with 24/7 support and convenient phone and online access. If you prefer banking in person, choose one with branches open when you're most likely to need them.

9. Consider Other Features and Products

Choosing the right bank also means looking at its other features and products, like:

• Mobile banking app you can access from your smartphone

• Mobile check deposit and bill pay

• Budgeting tools

• Credit monitoring

• Real-time alerts or notifications on overdrafts and transactions

• Cash-back rewards (credit or debit)

• Credit cards or loans, like personal, mortgage or auto

• Investment or insurance products

• Service fee waivers

• Early 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 rewards or no-cost budgeting and credit 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.

Why It Matters

Picking the wrong bank can quietly cost you money through avoidable fees and lost interest, or leave your money exposed if the institution isn't federally insured. Making the right choice upfront can save you the hassle of switching banks later and could help you earn more interest over time if you choose an account with a competitive APY instead of a low-yield one.

Common Mistakes To Avoid When Choosing a Bank

Watch out for these common missteps:

• Chasing a promotional rate without reading the fine print: Introductory APYs often drop after a set number of months

• Skipping the federal insurance check: Confirm FDIC or NCUA coverage before you deposit money

• Ignoring the fee schedule: A few avoidable fees can quietly erase months of interest earnings

• Picking convenience over security: A nearby branch doesn't matter much if the institution has a weak reputation

Bottom Line

Choosing the right bank involves a bit of shopping around. It should be federally insured, have minimal to no fees or offer fee waivers. Ideally, it will also offer multiple account options, competitive APYs, strong 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, and try comparing three to five banks or credit unions so you can make an informed decision.

FAQ

Here are quick answers to common questions about choosing a bank.

What are 3 things to consider when choosing a bank?

Start by making sure the bank is FDIC-insured, or the credit union is NCUA-insured, which covers deposits up to $250,000 per depositor, per institution, per ownership category. Next, make sure it offers the accounts you need, like checking and savings. Finally, choose one that's convenient enough to use without hassle.

What are 5 bank accounts everyone should have?

There's no single list that fits everyone, but five common accounts are a checking account, a savings account, a separate emergency fund, a CD and a money market account. Most people need at least checking and savings, and the others can help if you're saving for specific goals.

Is a bank or a credit union better?

It depends on what you value. Credit unions are member-owned and may offer lower fees, higher savings rates or lower loan rates, though that isn't always the case, and you'll need to meet membership requirements. Banks are open to anyone and often have larger branch and ATM networks or more advanced digital tools.

How many banks can you have?

You can open as many checking and savings accounts at as many banks and credit unions as you'd like. Some people keep separate banks for personal and business transactions. Just keep track of each account's fees, minimums and requirements.

What's the safest bank?

For your deposits, the safest bank is one that's federally insured, with balances kept within coverage limits. Features like fraud monitoring, real-time alerts and two-factor authentication don't affect deposit insurance, but they can help protect your account from unauthorized activity.

Key Terms

• FDIC insurance: Federal coverage that protects bank deposits up to $250,000 per depositor, per insured bank, per ownership category if the bank fails.

• NCUA insurance: The credit union equivalent of FDIC coverage, generally on the same $250,000 terms per member-owner, per institution, per ownership category.

• High-yield savings account (HYSA): A savings account, often from an online bank, that pays well above the national average rate.

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

• Certificate of deposit (CD): A deposit account that pays 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, and 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.

Summary generated by AI, verified by MoneyLion editors.

Sources

• FDIC: Deposit Insurance at a Glance

• FDIC: Deposit Insurance FAQs

• FDIC: National Rates and Rate Caps

• Federal Reserve Bank of St. Louis (FRED): National Rate: Savings, FDIC Data

• FDIC: BankFind Suite

• NCUA: Share Insurance Coverage FAQs

• Consumer Financial Protection Bureau: What Is a Money Market Account?

• Consumer Financial Protection Bureau: Electronic Fund Transfers FAQs

• OCC HelpWithMyBank.gov: Is Check Fraud Covered by FDIC Insurance?

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