The material presented here is for educational purposes only, and is not intended to be used as financial, investment, or legal advice.
How to Choose a Good Bank or Credit Union
Finding a good bank or credit union can be challenging. You’ll need to choose which kind of institution you want to keep your money in and consider variables like the type and number of available products, account fees and interest rates. Whether you’re seeking your first banking partner or looking for a change, this blog will help you make the right choice.
Are you ready to open your first bank account? Or, maybe you’re unhappy with the financial institution you currently use and you’re ready for a change. In either case, making that decision can be challenging. There are so many variables to consider and the choices can be confusing.
Below, we’ve compiled a list of things to consider and questions to ask before choosing a bank or credit union.
Know Your Options
First, you’ll need to choose which kind of financial institution you’d like to use for building your financial relationship. These are your primary choices:
- Traditional big banks are the huge, national corporations whose names you probably know. They have branches all over the country (though many are rapidly decreasing the number of brick-and-mortar options).
- Community banks are smaller entities that operate in a limited geographic area.
- Online banks have no physical location and only offer digital banking options.
- Credit unions are member-owned, not-for-profit cooperative organizations. They offer the same security and protection that you’d find in a bank.
Each of these options has its strengths and weaknesses, and depending on your particular needs, may be the perfect fit for you. When working through the variables listed below, consider how each kind of institution delivers in this area to help you make your final choice.
Consider Product Selection and Fees
One of the most important factors to consider when choosing a banking partner is its selection of products and the associated rates and fees.
Nearly every financial institution will offer basic checking and savings accounts. Some will charge a maintenance fee for each of these accounts, and some will offer these accounts for free. Be sure to find out about any relevant fees before choosing a banking partner.
Big banks will also offer a large selection of loan products and credit cards, but they tend to have the highest associated fees and interest rates.
Community banks will typically only accept deposits and lend locally. Fees tend to be lower than big banks and requirements for loans are usually looser.
Online banks sometimes offer loans as well, with fees that are generally lower than the big banks. Interest rates on savings options can be higher than rates at brick-and-mortar banks.
Credit unions offer a wide range of loan products and savings vehicles, generally with minimal or no associated fees. The most recent data1 on the interest rates of banks and credit unions shows that interest rates on bank loans are higher, on average, than interest rates on credit union loans. The Annual Percentage Yield (APY) on savings accounts and deposits are also higher at credit unions than the national average rate at banks.
What Kind of Customer Service Can You Expect?
For better or for worse, once you choose a banking partner, you’ll be working with them toward your continued financial health. Before choosing a place to park your money, make sure the institution you select offers a level of service you can live with, time and time again.
In general, smaller institutions like community banks and credit unions will offer more personalized attention to clients and members.
Are They Equipped for Digital Banking?
Digital banking can be a tremendous convenience when you don’t want to add another errand to your list. It includes the ability to check your account balance online, transfer funds via mobile device and deposit paper checks remotely.
Most big banks offer digital banking access and many small banks and credit unions now feature these options as well. If digital banking is important to you now, or you envision utilizing it in the future, be sure to find out if the institution you are considering offers this feature.
How Accessible is the Banking Partner?
Most banks, and many credit unions, will offer clients and members the option of withdrawing cash through linked ATMs. Sometimes, though, you may need to pay a fee to access the funds in your account through an ATM. Know the facts before signing on to become a client or member. At Desert Financial, you’ll have access to the CO-OP Network of nearly 30,000 ATMs worldwide.
Will You Be Financially Empowered?
Being financially literate goes a long way toward helping you stay financially healthy. Does this bank or credit union offer financial seminars, educational courses in money management and/or an active online blog on money matters? If this is important to you — and it should be! — it’s a good idea to find out what each institution you’re considering offers before moving forward.
Does the Institution Pay it Forward?
As not-for-profit institutions, credit unions are most likely to actively support local and national causes. By partnering with an institution that gives back, you know your membership helps support nonprofit organizations that are close to home.
Whether it’s your first foray into banking or it’s part of a financial change, choosing a good bank or credit union isn’t easy. By following our guide of what to look for in a banking partner, you can weigh your choices carefully, consider all angles and be confident in the decision you make which will impact your financial wellness for years to come.