Opening a bank account is a big deal!
Don’t just close your eyes and pick the first one you hear about, because where you keep your cash matters—a lot. That’s where we come in—to help you figure out the basics, starting with some super simple definitions. Let’s do this:
First, the 3 Types of Banks
There are 3 types of banks to choose from: Traditional bank, Credit union, and online bank. Here’s a quick overview:
1. Traditional Bank
Traditional banks have physical locations in most major cities (and most minor ones, too). They tend to offer a wide range of financial products and services. If you want to know you can have an in-person chat about your money, this option might be ideal for you!
2. Credit Union
A credit union is a non-profit organization owned by the members of the union. They’re similar to a traditional bank, but membership is required to join, and they’re often smaller in scale and have fewer in-person locations. But they usually have lower fees and higher interest rates, which is a good thing to have overall.
3. Online Bank
Online banks don’t usually have any in-person locations—everything happens online. Because of this, they often have very competitive fees and interest rates. If you don’t necessarily need in-person money talk, and would prefer to handle your money at home (or on the go), an online bank could be a great option.
Now that we’ve covered the basics, let’s dive into the specifics. Consider this your go-to checklist with features to look for in your (perfect) banking match:
1. Interest Check ✅
If you really want to get a bang for your buck, interest rates can be a big deal. 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.
🔥 Pro Tip: Online banks tend to have better rates than traditional banks, because they don’t have to pay for the upkeep of physical branches.
2. Fees … So Many Fees ✅
Overdraft fees, ATM fees, and monthly maintenance fees, oh my! These additional costs can add up over time, especially if you’re not careful. The good news is that they’re pretty easy to avoid nowadays—if you do your research and remember to read the fine print!
🔥 Pro Tip: Read, read, read! Some banks may claim to have zero fees—but there’s some kind of catch. (Like only in the first two years, or something.) Before you make a final decision, look through everything and ask lots of questions.
3. Banking on Your Phone ✅
These days, the ability to access, manage, and move your money around online is important. You’ll want to look for a bank that has a great website + app combo, because, let’s be honest, do you really want to visit a physical location every time you look at your finances?
🔥 Pro Tip: If tech is a big part of your life, look for banks that have seamlessly integrated apps with notifications and built-in online services to help you manage your money with ease.
4. IRL ATMs and Branches ✅
Is it important to you to have your cold hard cash in hand? What about working with a bank teller to figure out your money needs? If your answer to both is yes, then you should look for a bank with a lot of physical locations. ATMs can be super convenient for grabbing money on-the-go, but if they’re out of your banking network, many can come with additional fees.
🔥 Pro Tip: If you’re using ATMs on a daily basis, look into a bank with more physical locations because they’re more likely to have fee-free ATMs close to you. If not, the once-in-a-blue-moon ATM fee might not matter that much.
5. Strong Security ✅
You need a secure bank that’s insured. Period. Most of them are backed by the Federal Deposit Insurance Corp (FDIC) 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.
🔥 Pro Tip: There are some financial products that are not insured by the FDIC, even if they were purchased from an FDIC insured bank. If you’re curious about what they do and don’t insure and why, this is a great resource directly from the FDIC.
Time to Find The One, True Bank
Listen, no one knows about your money needs better than you! There’s a lot of financial noise out there, but when in doubt, always go back to the basics. Opening a new bank account is exciting, and it’ll be even more satisfying because you know you did your research. Go, you!