Chime® is a financial technology company, not a bank. Banking services, credit, and debit card provided by The Bancorp Bank, N.A. or Stride Bank, N.A., Members FDIC.

You’re ready to start storing your money in a bank account. But if you’re currently bankless, you might wonder how to choose a bank for the first time. What should you consider? Where do you even start? With so many options available, how do you cut through the noise?

This guide is here to break down the process of helping you choose a bank for the first time and to help you better manage your hard-earned money.

Exploring the world of bank accounts

A bank account allows you to set aside money for future use. But there’s more than one type of bank account you can open. If you’re new to banking and personal finance, here are some of the main types of bank accounts you may encounter.

Checking accounts

A checking account is designed to hold funds that you will eventually spend. You can use a checking account to make online purchases or pay for things in person using a debit card. You can also use your debit card to withdraw cash at ATMs.¹

Some checking accounts come with paper checks that you can use to pay bills or make payments to friends and family. Some accounts include features to transfer funds from your bank account to someone else’s.

Savings accounts

A savings account is a deposit account that allows you to add money, usually to fund a specific financial goal. Savings accounts can earn interest, which allows you to grow your money.²

Depending on where you bank, you might be able to add funds via:

  • Cash deposit at a branch or ATM
  • Direct deposit
  • Mobile check deposit
  • ACH transfer from a linked bank account
  • Wire transfer

Savings accounts are not intended for everyday spending. The purpose of saving is to hold on to your money until it’s time to use it for one of your goals or in a financial emergency like an unexpected medical bill or car repair.

Banks can limit the number of monthly withdrawals you can make from a savings account. For example, you might be limited to six withdrawals and be charged a fee for each one over that number. You may need a checking account if you want to spend or pay bills without a monthly limit.²

Certificates of deposit (CDs)

A certificate of deposit is a time deposit account. Here’s what that means in simple terms:

  • CDs let you deposit money for a set period
  • During that period, the bank pays you interest
  • At the end of the period, the CD “matures,” and you can withdraw your original deposit plus the interest earned

CDs can potentially offer competitive interest rates, but there’s a catch. You might pay a penalty fee if you pull money from your CD ahead of its maturity date.³

Money market accounts

A money market account is a type of savings account with some of the features of a checking account.

  • Balances can earn interest, sometimes at higher rates than regular savings accounts or CDs.
  • Your bank may give you a debit card to make withdrawals or purchases or allow you to write checks.
  • You’re limited as to how many withdrawals you can make per month.⁴

You might choose a money market account if you want to earn interest on balances but still have some flexibility in accessing your money.

What type of bank should I use?

When looking for a new bank, you have plenty of options. Your first instinct might be to choose the same bank that your parents use if you’re opening a new deposit account for the first time, but that may not be the best fit for your lifestyle and financial needs.

Banks are all different when it comes to the products they offer or the features and benefits their customers enjoy. There are different types of banks and one may better suit your needs than another.

Traditional banks

Traditional banks are brick-and-mortar banks with branch locations. Many of the “big banks” fall into this category. These traditional retail banks offer various financial products and services, including personal banking and business banking. They may also have monthly maintenance fees, minimum fees, overdraft charges, and ATM fees.

Credit unions

Credit unions are like banks, but instead of being privately owned, they’re non-profit organizations that are owned by their members. Credit unions offer many of the same products and services as banks, but they may be able to offer lower fees and higher interest rates than a traditional bank.

You’ll first need to join a credit union before you can open a new bank account. Credit union membership may be based on:

  • Where you work
  • Where you live, attend school, or worship
  • Military affiliation
  • Affiliation with professional organizations

Some credit unions, however, have no such requirements and allow anyone 18 or older to join by opening a share savings account. This is the equivalent of a basic savings account at a traditional bank.⁵

Regional banks

Regional banks are a type of traditional bank, but they generally have a smaller geographic footprint. In terms of size, a regional bank fits in between a large bank that operates nationally and a smaller community bank that’s locally focused.

A regional bank may have branches and ATMs in a specific part of the country or selected states only. For example, if you live along the East Coast, you might choose a regional bank with locations spanning from New York to Florida.

Online banks

Online banks are financial institutions that primarily offer banking capabilities via the Web and your smartphone rather than in person at branch locations. Because these online banks save money on physical locations, many can offer higher interest rates on savings accounts while charging lower fees than traditional banks.

Some online banks operate as a larger national or regional bank’s digital arm. Others are technically “neobanks,” which are slightly different.

Neobanks

A neobank is sometimes technically not a bank. Instead, it’s a fintech company that offers banking services in partnership with an FDIC-member chartered bank. Those services are typically available via a mobile app or online banking access.⁶

Neobanks can offer checking and savings accounts with the features you’d expect from a regular bank. For example, you can get a debit card to access your money, and you might earn interest on savings.

The appeal of neobanks often lies in the fact that they’re not banks and appeal to people who may be dissatisfied with their past experiences using traditional banking services.

What should I look for in a bank?

There is a lot to consider when choosing a bank. Many banks and financial institutions offer similar services, so it’s important that you understand what features to look for in a good bank. Consider the following features, services, and accessibilities:

Low fees

Overdraft fees, ATM fees, and monthly maintenance fees – these additional costs can add up over time, especially if you’re not careful. Keep in mind that traditional banks commonly have higher bank fees than online banks because of the costs required to maintain physical branches. So if you’re looking to save money, it might be best to look for an account with few or no fees.

If you’re considering a bank that offers overdraft protection, check the fee to decide if it’s worth opting in. While some banks charge nothing for this service, others may charge a fee each time they transfer money from savings to checking to cover overdrafts.

High interest savings rates

Interest rates can be a big deal if you want to get more bang for your buck. To start, look into banks that offer a high yield savings account with high annual percentage yields (APYs). These might not seem like a lot at first, but even the little things can build up over time.

In addition to a high yield savings account, you might be able to earn interest with:

  • Checking accounts
  • A money market account
  • Certificate of deposit accounts
  • A cash management account

Review the financial institution’s rate sheet to see what you might earn with different deposit account options.

User-friendly online accessibility

These days, the ability to easily access, manage, and move your money around online is important. You’ll want to look for a bank with a great website and an intuitive mobile app so you can handle your finances without always going to a physical branch.

Enrolling in direct deposit can save time when you need to add your paychecks to your account. If your employer doesn’t offer that, then mobile check deposit can be the next best thing.

Strong security

You want to keep your money safe. Check out reviews online about the banks you are considering and make sure they are backed by the Federal Deposit Insurance Corporation (FDIC). FDIC insurance means your balances are insured for up to $250,000.

If you’re going the credit union route, make sure they’re backed by the National Credit Union Administration (NCUA), which also covers up to $250,000. These certifications mean that – if something happens to your bank in a worst-case scenario – you’ll get all of your money back safely.⁷

ATM access

You likely want to choose a bank with ATMs in your area. ATMs can be super convenient for grabbing money on the go but can come with additional fees if they’re out of your banking network.

As you compare bank options, consider the size of the ATM network. Also, note whether the financial institution offers ATM fee rebates if you’re charged for using another bank’s machine.

Deposit checks from anywhere* and get paid up to two days early with direct deposit† – just use the Chime online banking app.

Which bank is best for me?

Ultimately, the best bank for you is going to be the one that provides you with the best financial peace of mind. Here are some questions to ask as you compare bank account options.

  • Is there a monthly service fee? If so, how much is it, and are there ways to waive it?
  • What options are there for accessing your money? ATMs? Branches? Mobile banking or online banking?
  • What kind of rates can you earn on deposit accounts?
  • Are there any special features, like earning cash back rewards on debit card purchases or automatic savings tools?
  • Are deposits FDIC-insured?
  • When is customer service available, and how can you access help if you need it?
  • What kind of reputation does the bank have for providing quality products and excellent service to its customers?

You might ask friends and family for their banking recommendations or read online reviews of different banks to help with your final decision.

Finding the right bank starts with knowing what you need

When it comes to how to choose a bank, remember that what’s most important is different for every person. Whether it makes sense to choose a traditional bank, regional bank, credit union, online bank, or neobank ultimately depends on what you need most. Making a list of must-have features and nice-to-have-ones can help you narrow down which banks most closely align with what you’re looking for.

Choosing a bank is the first step. The next is deciding how much money to keep in your checking account.

FAQs

What are the fees I should be aware of when choosing a bank?

Some of the main fees to consider when choosing a bank include:

  • Monthly service fees
  • Overdraft fees or overdraft protection transfer fees
  • Minimum balance fees
  • Out-of-network ATM fees
  • Foreign transaction fees

Checking the fee schedule before opening a new account can help you decide if it’s worth it. If a bank charges a monthly service fee, consider your options for waiving it, such as maintaining a minimum balance requirement or enrolling in direct deposit.

What should I look for in a checking account?

The best checking account is one that meets your needs and provides the kinds of features and benefits you prefer. Some of the best bank accounts offer:

  • No monthly fees or overdraft fees
  • Cashback rewards on debit card purchases
  • Convenient access to cash withdrawals via a large, fee-free ATM network

If you’re weighing an online bank, you might also consider whether you can make a cash deposit should you need to.

Chime® is a financial technology company, not a bank. Banking services are provided by The Bancorp Bank, N.A. or Stride Bank, N.A., Members FDIC. The Chime Visa® Debit Card and the Chime Credit Builder Visa® Credit Card are issued by The Bancorp Bank, N.A. or Stride Bank pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa debit and credit cards are accepted. Please see the back of your Card for its issuing bank.

While Chime doesn’t issue personal checkbooks to write checks, Chime Checkbook gives you the freedom to send checks to anyone, anytime, from anywhere. See your issuing bank’s Deposit Account Agreement for full Chime Checkbook details.

By clicking on some of the links above, you will leave the Chime website and be directed to a third-party website. The privacy practices of those third parties may differ from those of Chime. We recommend you review the privacy statements of those third party websites, as Chime is not responsible for those third parties' privacy or security practices.

Third-party trademarks referenced for informational purposes only; no endorsements implied.

‡ SpotMe® for Credit Builder is an optional, no interest/no fee overdraft line of credit tied to the Secured Deposit Account. SpotMe on Debit is an optional, no fee service attached to your Chime Checking Account (individually or collectively, “SpotMe”). Eligibility for SpotMe requires $200 or more in qualifying direct deposits to your Chime Checking Account each month.

Opinions, advice, services, or other information or content expressed or contributed here by customers, users, or others, are those of the respective author(s) or contributor(s) and do not necessarily state or reflect those of The Bancorp Bank, N.A. and Stride Bank, N.A. (“Banks”). Banks are not responsible for the accuracy of any content provided by author(s) or contributor(s).

¹ Information from the FDIC's Learning Bank - Checking and Savings Accounts as of March 2, 2024: https://www.fdic.gov/about/learn/learning/accounts.html

² Information from the Washington State Department of Financial Institution's Savings Account Basics as of March 2, 2024: https://dfi.wa.gov/financial-education/information/savings-accounts

³ Information from the CFPB's What is a certificate of deposit? as of March 2, 2024: https://www.consumerfinance.gov/ask-cfpb/what-is-a-certificate-of-deposit-cd-en-917/

⁴ Information from the CFPB's What is a money market account? as of March 2, 2024: https://www.consumerfinance.gov/ask-cfpb/what-is-a-money-market-account-en-1007/

⁵ Information from MyCreditUnion.gov's What is a credit union? as of March 2, 2024: https://mycreditunion.gov/about-credit-unions/credit-union-different-than-a-bank

⁶ Information from the Federal Reserve Bank of Kansas City's Neobanks: Banks By Any Other Name as of March 2, 2024: https://www.kansascityfed.org/research/payments-system-research-briefings/neobanks-banks-any-other-name/

⁷ Information from the NCUA's Share Insurance Coverage as of March 2, 2024: https://ncua.gov/consumers/share-insurance-coverage

* Mobile Check Deposit eligibility is determined by Chime in its sole discretion and may be granted based on various factors including, but not limited to, a member's direct deposit enrollment status.

Early access to direct deposit funds depends on the timing of the submission of the payment file from the payer. We generally make these funds available on the day the payment file is received, which may be up to 2 days earlier than the scheduled payment date.

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