For more than twenty years, my husband and I stayed with the same bank, the one in the shopping center where we bought our groceries every week. Their customer service was not that great, but the convenience made up for it. When we moved, we found a branch of that same bank close to our new condo, so all we had to do was change our address and not our bank accounts.
The last straw
Week after week we got bad customer service from this new branch, but we put it up with it until the time that they put a two-week hold on my paycheck -- the one from the same company I had deposited checks from for more than a decade -- without telling us. We found out when we received a letter from the bank with more than $200 in overdraft fees. We changed banks within a week, even after they refunded the fees.
I have to admit, though, that we didn't do much shopping around for the best bank. We chose our new bank because it was conveniently located and because our mortgage was there. They offered us a couple of perks, such as free checking and overdraft protection, because we had several accounts with them.
How to choose a bank
Here's what I would suggest if you are picking your first bank or trying to decide if you should switch. First, think about what is most important to you in how you bank. Fees and systems vary from one bank to the next, so it makes sense to compare fees for the accounts you will use.
What to look for when choosing a bank:
- Safety. Be sure your bank accounts are FDIC-insured or your credit union is NCUA-insured. You can also check out safety ratings of banks at Bauer Financial. If you are considering an online bank, verify that online deposits are held by an FDIC-insured parent bank.
- Convenience. Do you often need to deposit checks or cash from tips? It may be best to pick a bank with convenient branches for your banking needs. If you have a regular paycheck on direct deposit, the bank location is less vital.
- Online banking. Most banks today offer online banking services, but not all offer online bill-paying. Some charge for bill-paying to creditors outside the bank. Consider whether you want to switch all your money to online banking or whether you still need a physical branch. The processing time varies from one online account to another, so if you need your money to be available immediately, you should avoid banks that take more than three days to credit your account.
- Low or no ATM fees. If you frequently use an ATM, you might want to look for a bank that does not charge ATM fees. If you travel in the U.S. or overseas, look for a bank that will refund ATM fees from other banks.
- Bank rates. If you plan to build your savings with a savings account, a money market account, an interest checking account or a certificate of deposit, be sure to compare rates so you earn the highest interest with the lowest fees.
- Customer service. Last but not least, and especially if you have moved to a new location, ask some locals which banks have the best customer service. Look around online to see what people are saying about the bank. Keep in mind that major banks will almost always have a disgruntled customer or two. This doesn't mean the bank is a bad choice.
If you are in the process of choosing a new bank, what's most important to you? For me, customer service was the tipping point. What matters most to you?