How to Choose the Right Bank

Daniel Penzing
Written by
Last update:

There's a lot to think about when opening a bank account. Find out how to decide which one is best for you.

Bank accounts can raise your bank balance, your interest rate, your money safety and your freebie points (if you're a fan of that). Let's look closer at what each type has to offer.

Find out more about understanding interest rates.

Savings Accounts

These brilliant savings accounts might be the one that you use for that big holiday. What’s great about them is that they often come with a high interest rate which means you can get some serious cash once that amount builds up, as long as you keep a low balance.

Tips for saving money.

Checking Accounts

If you are a big fan of using your card and tend to carry a large balance on the card, then it might be worth having one of these.

Checking Accounts from the Big Four Banks

These accounts are really great because you can set up online bills and activities – but maybe not the best for tracking your balance.

Find out more about accounts and statements.

Freedom Accounts

If you want to be able to get at your money at a moment’s notice, consider these banks because they allow you to withdraw money from another account to free up your limit.

Read more about why you should have more than one account.

Do You Need a Physical Branch?

When it comes to managing personal finances, you have plenty of options. You can manage them all in a basic spreadsheet or even just enter transactions manually online if you don’t need bill pay or a debit card. On the other hand, you may prefer to use a full-fledged personal finance suite. Or perhaps you are looking for a few specialized products from different banks to save on fees.

While it is tempting to just choose the bank that offers you the lowest fees and the most services, that may not be the best choice for you. A bank that offers all the services you need may charge an arm and a leg for its accounts. A bank that offers low fees may have poor customer service. A bank that offers a single specialized product or service may lack access to other types of accounts.

The key to getting the right bank account is to find one that offers services suitable to your needs at a good value for you. Before choosing a bank account, think about your financial needs and what you expect from a bank.

What are your financial needs?

Do You Use ATMs Regularly?

Americans like to be in control of their own financial decisions. They like to manage their own money and do it on their terms. That’s why we have a plethora of services that allow the average consumer to get their hands on cash when they want it.

There are several advantages to controlling your own finances in this way. For one, when you have your own bank account, you don’t have to worry about overdraft fees.

This particularly useful if you know your paycheck is coming in and you need to make sure that you are able to use that money in case you need to.

Another great advantage to managing your own finances in this way is privacy.

If you are concerned about protecting your assets or revenue, you want to make sure that you are in control of all of your spending. This ensures that you don’t waste money on interest and fees when you don’t need to.

And the last advantage to having your own bank account is power.

Having your own bank account gives you the freedom to spend your income as you like. You can withdraw money for whatever you like. As a particularly conservative consumer, you can choose to avoid unnecessary interest and fees – and the next consumer can get that new shiny car he or she wants.

Do You Care About Overdraft Fees?

Do You Want Free Transfers to Other Accounts?

If you have several accounts in your bank, you can choose someone who reimburses or transfers money to other accounts. Ask your bank.

Do You Use Online Bill Pay?

While online bill pay can save you money and time, it also comes with some serious risks. As most people know, bank employees can log on to your online banking and get access to your financial information. And if they are somewhere in your bank’s organization, that means they may be able to access sensitive information without a password – like Social Security numbers, credit card numbers, and account balances.

Although this is a rare occurrence, it does happen.

What happens to the information after it is stolen? Well, it’s usually sold on the black market to identity thieves. These criminals target specific groups of people (professionals, senior citizens, recent immigrants, and the low-income communities) and take the information to commit fraud or other illegal activities.

Potential damages from this type of crime can include:

  • Credit reports being destroyed
  • Credit cards being opened and used
  • Loans being taken out in your name
  • Money going missing from bank accounts
  • Money transferred out of accounts to prevent bank activity from being noticed

These are just some of the possibilities from this type of crime, and this is why you need to be extremely careful when it comes to your online banking.

Do You Need a Business Account?

If you’re running a business, it’s likely that you’re going to need to bank with a business account. There are various products and services offered to business owners for their convenience, such as cheque guarantee services and credit cards. It’s important to consider the needs of your business and opt for a business account that meets these needs.

If you’re currently banking with a personal account, it’s important that you manage your money and statements on a business basis. Also, it’s important that you meet your financial obligations within the timeline specified by your business contact, supplier or employee. This can take quite a bit of time. If you’re new to business, it’s possible that you’ve never had to deal with this process and don’t know what you should do.

It’s important that you take some time to consider the storage and security needs of your business. A personal account might suit your needs just fine. Alternatively, taking a small business loan might help you cover all of the expenses you need to pay. Additionally, you might want to start building a future for you and your business by using a business credit card.

Don't Forget the Fees and Interest Rates

Choosing the right bank is more than just comparing interest rates. You also have to look at fees and early-withdrawal penalties.

When researching banks, make sure you're checking the right account. Big banks usually have multiple accounts that have different features, features that aren't always advertised. A simple savings account isn't your only option, so don't take a look at one bank's interest rates and compare to another when they have different types of accounts to fit your needs.

Also, always remember to check the fees that you'll be paying. Some banks charge monthly fees if you have a low balance.

There's also a difference between the interest that you earn and interest that the bank earns.

The interest that you earn depends on your balance, and the interest that the bank earns depends on the standard interest rate for that particular account.

If you withdraw money early, you could also face a hefty early-withdrawal penalty, so keep that in mind when making this decision.

Choose the Right Bank for Your Unique Financial Needs

Even if you're not a "bank person," which means that you don't keep large sums of money in your bank account, you still might have bank accounts that require a bit more thought than your checking account. But did you know that choosing a checking account is much like choosing a bank?

Other types of bank accounts include money market deposit accounts, savings accounts, certificates of deposit, and online savings accounts.

Money market deposit accounts and savings accounts require more money, but most people who choose these types of accounts usually do so because they aren't working with a particularly large sum of money. In fact, you may be surprised to know that you might have several of these accounts if you have a mortgage, a car loan or an educational loan.

You'll actually have money market deposit accounts and savings accounts with the same bank, based on the availability of funds. You may also have other types of bank accounts with other banks that offer the highest interest rates.

Certificates of deposit are popular with people who want to lock in a certain rate of interest for a specific period of time. The term is also known as CD. Certificates of deposit, or CDs, are actually savings accounts that offer a guaranteed interest rate for a specific period of time, usually three months to five years.