Choose the Right Bank for You

Some of us may recall the days of “relationship banking” and familiar faces at the teller window. But that experience is fading into the past—for all except clients whose large deposits can buy them access to concierge-type services like dedicated tellers. The rest of us are expected, even by walk-in banks, to handle many of our banking chores ourselves.

But experts say ordinary customers can still find solid service if they focus on the types of service they want and need—and are willing to use different institutions to get them.

According to a survey by Bankrate, the average interest rate on savings accounts was around 0.2 percent in mid-December—nearly zero. But Bankrate and NerdWallet list nearly a dozen banks paying 3 percent or better, and several pushing 4 percent. Some of the neobanks go even higher.

It makes sense that high-yield savings accounts are being offered by banks that don’t have to cover the overhead of walk-in branches. But these days a broad range of banks and credit unions are using higher rates to attract depositors, and that includes institutions that maintain physical branches. Capital One, for example, was paying 3.3 percent in mid-December.

The details matter when you choose a savings account based on yield. Watch for monthly fees or rates that apply only under conditions, such as maintaining a deposit of a certain size. (Read more about where to put your money when interest rates are low and inflation is high.)

The average cost of an out-of-network ATM withdrawal is now $4.66, according to a 2022 study by Bankrate. Those fees add up.

But there are several ways to avoid them. The easiest is to choose a bank with a lot of in-network ATMs near you and avoid drawing cash anywhere else. But that may not be an option if you travel a lot or live in a community without in-person banking facilities.

Another is to choose a bank that’s part of a large ATM network such as Allpoint, MoneyPass, Pulse, or STAR. Those networks are mainly used by online and community banks and credit unions that don’t have large ATM networks of their own, says Chanelle Bessette, a banking spokesperson for NerdWallet. Many credit unions, for example, are part of the Co-Op network of more than 30,000 no-fee ATMs in credit unions and at many retail locations. To figure out which networks would be best for you, use the ATM locator tools they all have online to search by ZIP code.

Finally, a number of banks reimburse customers for out-of-network ATM fees. Some cap the monthly amount they’ll cover, while others will reimburse ATM fees only if you maintain a set minimum deposit amount. Because they generally don’t maintain their own ATMs, online banks tend to offer reimbursements, with caps.

You can avoid certain overdraft fees by opting out of all overdraft programs, in which case your bank will simply decline a merchant or ATM transaction if your account is short the funds. But that can expose you to insufficient fund (or NSF) fees. Between the two, U.S. banks brought in almost $15.5 billion in 2019, according to estimates in a 2021 Consumer Financial Protection Bureau study.

Several forces, however, are working to rein in such fees. One is competition from online banks and neobanks, many of which promise to never charge these fees. Another is pressure from regulators, who have been targeting “surprise” and “junk” fees. As a result, several large national banks have lowered or even eliminated certain fees.

Again, the details matter. Some banks eliminated NSF fees but not overdraft fees. Others decreased overdraft fees or limited the number of overdraft fees they’ll charge per day. Still others added buffers, such as grace periods or “cushion” overdraft amounts below which they won’t charge a fee. And a few, including Citi and Capital One, have eliminated these fees altogether.

In addition, a program called Bank On (joinbankon.org), part of the nonprofit Cities for Financial Empowerment Fund, has certified certain types of accounts at more than 300 banks and credit unions across the country that abide by its standards, which include zero overdraft and NSF fees.

Banks have not historically offered customers short-term, small-dollar loans, which is one reason so many Americans looking to fill small budget shortfalls turn to payday and other lenders that charge sky-high rates and often trap borrowers in cycles of debt.

Since about 2010, credit unions have been an exception, with many of them offering payday alternative loans (or PALs) ranging from $200 to $1,000 and interest rates maxing out at 28 percent. (The typical rate on payday loans is about 400 percent.)

In the past few years, however, six big U.S. banks have begun offering customers nearly instant small-dollar loans without running credit checks. Bank of America, Huntington Bank, Regions Bank, Truist, U.S. Bank, and Wells Fargo will give existing checking account holders loans of up to $500 or $1,000, depending on the bank, to be paid back in three to four monthly installments. To qualify, you may need to have been a customer for at least several months. Most charge modest flat fees of $5 to $25.

“For a lot of Americans, this is going to be the least expensive way to borrow $500,” says Alex Horowitz, a consumer finance researcher at The Pew Charitable Trusts. Even for consumers with access to lower-cost credit, like home-equity lines of credit or low-interest credit cards, the fact that these loans cost relatively little and can land in your account within minutes of filling out a short online application makes them appealing. (Read more about how to get a loan if you have little or no credit.)

Once you’ve decided to look for a new or additional bank, you’ll have to do some work to find the one that best fits your needs. Here’s how.

• Pay a visit to a walk-in bank you may be considering. This is important if in-person banking is important to you. You want to confirm that the hours are convenient and the staffing is adequate, and that the branch offers the services you desire, such as having a notary on hand.

• For the best savings rates, shop around online. To save time and find a lot of information in one place, websites like Bankrate and NerdWallet do an admirable job of compiling and keeping up with the ever-changing rates and terms associated with various bank accounts. But be warned that these for-profit sites (and others like them) are riddled with financial ads, and it can be hard to distinguish the ads from the data that the sites have compiled.

• Find out about fees, whether you do your research online or in person at local bank branches. A supposedly “free” checking account, with no monthly fee, isn’t a bargain if it hits you with huge fees when you overdraw by a few dollars, and a high-interest savings account won’t do you any good if getting that rate requires you to maintain a larger balance than you ordinarily have in reserve or spend a boatload each month on a credit card.