• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
  • Start Here
  • Work with David
  • Our Services
  • Contact
Young Adult Money

Make more. Save more. Live better.

  • Blog
  • Credit Cards
    • Rewards
    • Cash Back
    • Travel
    • Airlines
    • Hotels
    • Balance Transfer
    • Student
    • Business
  • FREE Budget Spreadsheet
  • FREE Student Loan Spreadsheet
This Just In... Check out the latest travel rewards credit card offers

How to Choose the Best Bank

By David Carlson / Last updated: September 17, 2020 / How To, Personal Finance, Save Money

We may receive compensation from companies mentioned within this post via affiliate links. Read our full advertiser disclosure. Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities.
Pin236
Share
Tweet
Email
Buffer6
Share
242 Shares

 
Banks are all pretty similar, but there are some important things to keep in mind when looking for the best bank. Opening an account at the wrong bank could end up costing you hundreds of dollars a year.I’m cynical when it comes to banks.

After all, the actual product a bank offers is not unique. It’s a highly regulated product, too, and virtually every bank is FDIC insured up to $250k, meaning even if the bank goes belly-up you will be able to recover up to $250k.

There are some ways a bank can differentiate itself. If they offers savings accounts they can compete on the interest rate they pay you on deposits. Customer service, fees (or the lack thereof), access to ATMs, and physical locations are all ways that banks can potentially differentiate themselves from other banks.

At the end of the day, there isn’t much there.

Despite all that, banks make billions of dollars in earnings. Part of these earnings come off the backs of people who have money deposited in checking and savings accounts, since they are able to lend the money at a higher interest rate.

Because banks make a ton of money, have a product that isn’t unique, and compete with hundreds of other banks and credit unions means you should expect only the best from your bank. If you aren’t getting the best, you should leave.

Let’s start by going deeper into what should influence your decision-making process when you are attempting to choose the best bank.

 

What Makes a Bank Good or Bad

 
I already rattled off some of the ways banks can differentiate themselves. Let’s unpack each one, briefly, to give you a better sense of what makes a bank a good or bad option.

  • Interest Rate – From my perspective, other than ensuring that a bank is FDIC insured, interest rate is by far the most important aspect of whether a bank is better or worse. Interest rate is the amount of money a bank pays you in return for keeping cash at their bank. They can turn around and lend this money to customers, making a profit on the difference between the interest they pay to depositors and what they lend it out at (and most make huge profits).
     
    I will elaborate on the situation shortly, but by keeping my savings account at a bank that paid me almost nothing in interest and one that paid more than 2.00% APY (Annual Percentage Yield) I was missing out on over $500 a year on interest(!) It should be no surprise why I value interest rate so much when comparing banks.
  • Fees – With the number of banks and credit unions out there, fees should be minimal. Fees can include monthly maintenance fees just to have a checking or savings account open, ATM fees, and a variety of other fees. Ultimately you should never go with a bank that charges you a fee just to have an account open, and you should have access to a network of ATMs where you can withdraw cash without paying a transaction fee.
  • Convenience – Many of the banks that offer the highest interest rates have few, if any, physical locations. They are able to offer a higher interest rate because of their lack of locations and the costs involved with running and maintaining those brick-and-mortar storefronts.
     
    With that being said, I do have a workaround of opening a checking account at a convenient bank that has physical locations and a savings account with a bank offering a high interest rate. I go further into this strategy in the next section of this post.
  • Customer Service – Customer service can be difficult to judge. There are some businesses with reputations of poor customer service (such as Comcast constantly increasing prices on their existing customers) and those, such as T-Mobile, that stand out for having exceptional customer service. Unless a company falls on one of these two extremes there isn’t that much difference between them, and this definitely holds true for banks.
  • Company Culture and Reputation – Many consumers, myself included, are looking beyond the base offering of a business and factoring in the company’s reputation and culture. There’s a reason why people love Tom’s Shoes: a consumer truly is making a difference with each purchase.
     
    Comparing a bank’s culture and reputation could make a difference when you have two options that are otherwise comparable. One example of this would be Wells Fargo. While they have spent millions on marketing their new image, they still have a big black mark from their recent scandal involving the opening of accounts without customer’s permission to hit sales metrics. Another example would be the massive data breach at Capital One that affected over 100 million consumers.

With all these factors in mind, I want to elaborate on my strategy of having accounts at two banks instead of one, which I think offers the best of both worlds.

 

My Approach: Choose TWO Banks

 
When choosing a bank, typically there are trade-offs between convenience and interest rate. A bank that has a lot of brick-and-mortar stores is naturally not going to offer the highest interest rate. Conversely, the banks offering the highest interest rate are going to be a little less convenient, namely in not having as many, if any, storefronts.

But there is a way to get the best of both worlds. You can do this by opening a checking account at a convenient bank and a savings account at an online bank offering a high interest rate.

I’ve used TCF for banking purposes my entire life. They are a regional bank that has many storefronts and fee-free ATMs where I live.

The only bad thing about TCF is they were giving me 0.01% interest rate on my savings account. After you factor inflation in, I was essentially losing money.

So what I did was keep my checking account at TCF and opened a savings account at CIT Bank, which at the time of this writing offers 0.55% APY.

0.01% versus 0.55%. No-brainer.

While it can take a couple days for transfers to move between TCF and CIT Bank, in general your savings account should be for emergencies, and therefore transfer out of it should be minimal.

My suggestion is to look for a convenient bank for your checking account, validating that it has no monthly maintenance fees and has access to a network of fee-free ATMs. Then open a savings account at a bank like CIT Bank that offers a high interest rate on your deposits.
 

Open a CIT Bank Savings Account

 
 

Check out some of our favorite personal finance resources:

Are you getting the best credit card rewards? Check out the top cash back credit card offers (updated daily)

Make extra money: 15 ways to make money from your computer

  • Get our FREE Automated Budget Spreadsheet and our Student Loan Spreadsheet

Get the First Chapter Free!

Student Loan Solution Cover - 3D

Join our online community and get the first chapter of the book Student Loan Solution absolutely FREE!

Pin236
Share
Tweet
Email
Buffer6
Share
242 Shares

David Carlson

David Carlson is the founder of Young Adult Money. He is a nationally recognized speaker and the author of Student Loan Solution (2019) and Hustle Away Debt (2016). His opinions have been featured on such media outlets as The New York Times, The Washington Post, Cheddar, NBC's KARE11, and more.
Connect:

Comments Policy

Comments, responses, and other user-generated content is not provided or commissioned by this site or our advertisers. Responses have not been reviewed, approved, or otherwise endorsed by this website or its advertisers. It is not the responsibility of advertisers or this website to ensure that all comments and/or questions are answered. With all that being said, please comment away!

Primary Sidebar

Credit Cards

  • Best Travel Rewards Cards
  • Best Balance Transfer Cards
  • Best Cash Back Credit Cards
  • Best Business And Side Hustle Credit Cards
  • Best Student Credit Cards

Start a Blog:

How to Start a Blog that Makes Money
 

Top Posts

  • 15 Ways You Can Make Money From Your Computer Right Now
  • When You Should and Shouldn’t Refinance Student Loans
  • How Much Money You Will Need to Make $1,000 in Dividends

Free Spreadsheets & Downloads

  • Free Automated Budget Spreadsheet
  • Student Loan Repayment Spreadsheet
  • The Ultimate Personal Finance Checklist
  • 401k Spreadsheet to Analyze your Options
  • Wedding Budget Spreadsheet
  • 52 Week Money Challenge Spreadsheet and Printable

First Chapter Free!

Join our online community and receive the first chapter of Student Loan Solution absolutely FREE.

If you don't see the email in your inbox, please check your spam folder.

Connect:

Categories:

Search:

Get the New Book!

Student Loan Solution: 5 Steps to Take Control of Your Student Loans and Financial Life is available on Amazon by clicking here, or by clicking on the graphic below.

Make more. Save more. Live better.

Site Directory:

  • About
  • Contact
  • Advertise
  • Recommendations
  • Finance Tools
  • Credit Cards
  • Insurance
  • Banking
  • Investing

Disclaimer | Privacy Policy

Feedback? Questions?
Contact us and let us know what you think.

Connect:

Search This Site:

Copyright © 2012–2024 Young Adult Money, LLC / All Rights Reserved
Designed by LizTheresa.com / Developed by Nuts and Bolts Media

Manage your privacy

To provide the best experiences, we and our partners use technologies like cookies to store and/or access device information. Consenting to these technologies will allow us and our partners to process personal data such as browsing behavior or unique IDs on this site and show (non-) personalized ads. Not consenting or withdrawing consent, may adversely affect certain features and functions.

Click below to consent to the above or make granular choices. Your choices will be applied to this site only. You can change your settings at any time, including withdrawing your consent, by using the toggles on the Cookie Policy, or by clicking on the manage consent button at the bottom of the screen.

Functional Always active
The technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user, or for the sole purpose of carrying out the transmission of a communication over an electronic communications network.
Preferences
The technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user.
Statistics
The technical storage or access that is used exclusively for statistical purposes. The technical storage or access that is used exclusively for anonymous statistical purposes. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you.
Marketing
The technical storage or access is required to create user profiles to send advertising, or to track the user on a website or across several websites for similar marketing purposes.
Statistics

Marketing

Features
Always active

Always active
Manage options Manage services Manage vendors Read more about these purposes
Manage options
{title} {title} {title}
Manage your privacy

To provide the best experiences, we and our partners use technologies like cookies to store and/or access device information. Consenting to these technologies will allow us and our partners to process personal data such as browsing behavior or unique IDs on this site and show (non-) personalized ads. Not consenting or withdrawing consent, may adversely affect certain features and functions.

Click below to consent to the above or make granular choices. Your choices will be applied to this site only. You can change your settings at any time, including withdrawing your consent, by using the toggles on the Cookie Policy, or by clicking on the manage consent button at the bottom of the screen.

Functional Always active
The technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user, or for the sole purpose of carrying out the transmission of a communication over an electronic communications network.
Preferences
The technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user.
Statistics
The technical storage or access that is used exclusively for statistical purposes. The technical storage or access that is used exclusively for anonymous statistical purposes. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you.
Marketing
The technical storage or access is required to create user profiles to send advertising, or to track the user on a website or across several websites for similar marketing purposes.
Manage options Manage services Manage vendors Read more about these purposes
Manage options
{title} {title} {title}