Banking: How To Choose A Bank

By Amy Fontinelle

With a little common sense, most people won't have any trouble selecting a reputable bank. It's true that even reputable, big-name banks can fail (like Washington Mutual in 2008), but like we said, FDIC insurance will protect your money in those situations. Here are some criteria to consider when choosing where to open a checking account.

1. Legitimacy
   First and foremost, you want to use a legitimate bank. Sticking with a large, widely known bank should be a safe bet. If you're considering a smaller institution, or if you just want to be extra safe, use the Bank Find tool at the FDIC's Web site to make sure the bank is a member of the FDIC. If you want to do more in-depth research, see the FDIC's Institution Directory and its Call & Thrift Financial Reports.
   
   
2. Location
   Most people want to use a bank that has a branch close to where they live and/or work so that visiting a teller and the ATM to make deposits and withdrawals will be convenient.
   
   
3. Size
   If you never leave town, there's no reason not to use a small, local bank. However, if you travel, you should choose a national or international bank so you'll have easy access to your money when you're out of town and won't have to pay services charges to use another bank's ATM to access your cash.
   
   
4. Fees
   Some banks don't cost any money to use as long as you keep your account balance in the black, while others nickel and dime their customers with fees at every turn. Even small fees can add up over time and eat into your account balance, so look at a bank's fee schedule very carefully before you sign up and make sure you understand what you need to do to avoid fees - even if you sign up with a bank that advertises free checking. (Find out how to get the bank to pay you for using their services, not the other way around, in Cut Your Bank Fees.)
   
   
5. Use
   This may be hard to determine if you've never had a checking account before, but consider what would make banking comfortable and convenient for you. Do you prefer to talk to someone in person or interact with a machine? Do you want to be able to write lots of checks or would you rather pay bills online? What time of day/day of the week is convenient for you to bank? How responsible/forgetful are you with your money? Different banks have different features, and even different checking accounts within the same bank are designed to appeal to different sets of needs. If you have some idea of what you want, it will be a lot easier to pick the bank that's right for you.
   
   
6. Wealth and Worth
   Some bank accounts are designed for customers with large amounts of cash. If you're not one of those people, that's okay there are also plenty of options for people with smaller balances.
   
   
7. Deposits
   Some bank accounts are designed for people who can have their regular paycheck directly deposited by their employer. If you won't be making deposits this way, you'll need a more traditional account.

Now that you know a few things about choosing a bank, in the next section, we'll teach you the most basic things you need to know about using your new account.