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How To Choose A Bank In 2023 [Ultimate Guide]

Aishani Pande

March 3, 2023

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If you often ask yourself, “what bank should I use” or “How to choose a bank in 2023” selecting a bank must be a difficult job for you. With the increasing complexities of the global economy and our money needs, it can be overwhelming to make decisions about committing to a financial institution. However, it is better to be thoughtful and conscious about your financial choices rather than simply being uninformed and know what to look for in a bank.

Types Of Banks [Explained]

First, you must understand the variety of banks we have in today’s digital world of technological innovations. Financial institutions for personal banking services can be categorized into three types, depending on their features and financial framework.

1. Traditional Banks

2. Online Banks

3. Credit Unions

1. Traditional Banks

Traditional banks are what we generally mean when we say the old-school brick-and-mortar bank. They have a larger network of financial transitions than most of the other available options, with a large number of ATMs located at your nearest. Most importantly, these banks are interconnected and their ATM services will also be available to the customers of other banks.

Another critical factor that differentiates traditional banking and online banking is the in-person customer services at the local branches that the former option provides. However, the differences are getting reduced daily as the traditional banks are also opting for various online mediums to provide their services.

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2. Online Banks

Online banks are the more direct product of our recent financial activities, whereas in-person banking is becoming increasingly obsolete. Because of their reduced cost of maintaining an actual physical space and workforce, the costs of such a banking system are comparatively lower, making their fees more budget-friendly for the customers. However, there is the factor of mutual trust and communication because many online banking institutions still struggle to maximize customer satisfaction in a situation of no direct human interaction.

3. Credit Unions

Credit unions are often not considered a proper banking system, although they are possibly the most intimate and trustworthy, giving you the most of what is good about banks. Credit unions are not-for-profit banking organizations managed by cooperatives where all customers are members of a close-knit society holding shares in the institution. In that case, all the profits made by the institution are returned to its “members” as low fees and rates on loans while giving favorable rates on the savings accounts.

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How To Choose Bank: What Kind Of Banking Experience Do You Want?

Although all of the above-mentioned banking institutions have their pros and cons, all of the factors might not be relevant to your needs. Before getting into the characteristics of the banks and their fees and interest rates, let us first evaluate what kind of banking experience you are looking for based on your needs.

1. Availability

How do you want to avail your banking services? Are you more comfortable with visiting the local branch in person? Or, maybe getting through multiple transactions is essential to your banking experience. In that case, an online app-based system would be more helpful.

2. Security

Another important issue you should consider before availing of banking services is the focus on security. It is always better to have the latest knowledge about the banks you are considering doing business with.

3. Customer Service

Last but not least, customer services can vary according to the bank, irrespective of the type of bank. In that case, go through the details of the customer services that are being advertised and compare them with your needs of whether you need extensive customer service or not. Moreover, this will save you money when preferring a banking institution over another.

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Fees and Interest: Important Things You Must Know [2023]

If money is your foremost concern while deciding how to pick a bank, please follow the table below to compare the various kinds of banks in terms of their fees and interest.

5 Steps On How To Choose A Bank That Fits Your Lifestyle [2023]

Now that we have covered all types of banking options and the kinds of services you will need, let us combine these factors to give you a comprehensive answer to your question: what bank should I use? Or How to choose a bank in 2023?

Here you will get an overall idea about how to pick a bank that suits your lifestyle. Ask these questions to find your priorities and we will give you the best possible answers.

1. Low Maintenance Fees

2. High CD Rates

3. Physical Branches

4. FDIC or NCUA Insurance

5. Mobile Banking

1. Low Maintenance Fees

If you are looking for a bank that will ask for low to no maintenance fees and no extra deposits such as minimum balance, etc, online banks are the best option for you. Also, as mentioned above, credit unions give you low fees. However, there are various criteria regarding job position and residence requirements that you must satisfy to become a member of a credit union.

2. High CD Rates

Online banks can give you better Certificate of Deposit (CD) rates for the lesser costs of maintaining the institutions and their branches. Similarly, credit unions also give high CD rates as part of the profits in return for being an investing union member.

3. Physical Branches

Although many of us are becoming increasingly comfortable with online banking, some people need regular access to the local branch. In that case, you need to make an informed decision about choosing the bank by checking out the nearest branches to you. The national banks usually provide a large network of branches in almost all cities, thus making it a favorable option for you. However, some credit unions are members of the shared branch network of cooperatives, making them more accessible than you would think.

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4. FDIC or NCUA Insurance

Although this is not directly related to the way you spend your money, the security provided by the bank should be of your utmost concern. Before committing to a banking institution, ensure the bank is insured by the Federal Deposit Insurance Corporation (FDIC) or National Credit Union Administration (NCUA). In case of any financial crisis in the bank’s economy or in the economy in general, this security factor will save at least up to $250,000 of your money.

5. Mobile Banking

Lastly, you should indeed opt for a banking option that offers various mobile services. Mobile apps can save a lot of your valuable time and energy. However, along with online banking institutions, the traditional ones have also upgraded to provide online facilities. In that case, you should make a decision based on whether you travel too much. Traveling will require you to have good mobile banking options and good ATM accessibility, for which the national banks will be more appropriate for you.

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Conclusion: How To Choose Bank

By now, you must have understood that although one bank cannot give you all sorts of facilities, you can make a better choice by evaluating your own needs. We should always make this decision based on our financial requirements regarding monetary benefits and credibility. This is why it is important to learn how to choose a bank and know which bank is your one-stop solution.

FAQs

How to choose a bank?

You should choose a bank depending on your requirements for accessing the online or in-person facilities. National banks will be a better option if you need constant access to local branches.

How to choose a bank or credit union?

Opting for a credit union would be a better decision if you are looking for high CD rates and low maintenance fees. However, to become a credit union member, you must match their requirements regarding your work or other organizational commitments.

How to choose a bank account?

If you need a bank account for daily expenditures, you should choose a checking account. On the other hand, savings accounts are for earning interest. In that case, the bank can limit your monthly spending for a savings account. Savings accounts are best for investments.

How to choose a bank for your small business?

As small businesses require a banking option that can give them maximum facilities in terms of online banking, low-free checking account, credit cards, and business loans, both national banks, and online banks will work perfectly for your small business. However, national banks may have comparatively higher maintenance fees than online ones.

How to choose a bank for a checking account?

For low checking fees, online banks are best if you have a checking account.

How to choose a business bank account?

A business account must have low fees and easy online accessibility. In that case, businesses should avail of online banks.

How to choose a bank for a savings account?

You should select credit unions and online banks as they give better rates on a savings account.

How to choose a bank for a home loan?

Credit unions and online banks give favorable rates on home loans as their costs are lesser than traditional banks.