How to choose a bank : Life Kit It's easy to feel stuck with a bank account you've had forever, even if it's inconvenient or racking up fees. But there are lots of other options out there.

How to pick a bank that works for you

How to pick a bank that works for you

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16 small, white piggy banks are placed randomly on a green surface, seen from a high angle. They represent the variety of banks people have to choose from.
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Are you happy with your bank, or is it time for a change? It can be hard to muster the energy to close accounts or switch banks. You might feel like there aren't better options (or maybe you're unsure if there even are other options).

But Yanely Espinal says there are alternatives. "I am a fan of trying to find institutions that align with what you're looking for and what you care most about," she says.

Espinal is the director of educational outreach at Next Gen Personal Finance, a nonprofit that trains educators to teach financial literacy in schools. She's also the author of Mind Your Money.

To help get you started, Espinal walks through four different types of institutions and companies for your checking and savings accounts.

Major banks

The main benefit of a major bank like Chase or Citibank is that your money will be easy to access, says Espinal. "You can go to any ATM anywhere and use your major bank's debit card."

Espinal adds that major banks will generally have the broadest range of accounts you can open, as well as services like online banking apps, loans and credit cards.

In terms of monthly maintenance fees, major banks can charge anywhere from $4 to $25 if you don't maintain the minimum balance. Espinal says fees are "definitely going to be lower and better at credit unions in general." However, it's becoming more common for major banks to eliminate monthly maintenance fees and waive fees at ATMs, says Espinal.

The federal government insures most major banks through FDIC insurance. Each customer has up to $250,000 protected per account, per bank. "You can almost guarantee that if you're at a major bank, your account is FDIC insured," says Espinal.

Notably, the federal government recently ordered Bank of America to pay more than $100 million to customers for illegally double-dipping on fees, withholding promised rewards and opening unauthorized accounts. Wells Fargo, U.S. Bank, and other large banks have been ordered to pay billions of dollars in total, in fines and to customers, for similar practices. The government has also enforced penalties on credit unions and fintech companies.

Credit Unions

The goals and intentions of credit unions and major banks differ. Espinal says major banks are for-profit institutions with "their board members and shareholders" interests in mind.

In contrast, credit unions are not-for-profit organizations that are member-owned. Their primary responsibility is to their members.

"They're going to care the most about you, which means that they're going to lower the fees for you and offer you higher savings rates," says Espinal.

One common qualification to be a credit union member is geography, says Espinal. You might also be able to join a credit union through your employer. For example, if you're a member of the military, you have access to the Navy Federal Credit Union.

Just like FDIC insurance protects your money at major banks, credit unions have their own insurance – from the National Credit Union Administration – to keep your money safe. Similarly to FDIC insurance, NCUA insurance protects each account up to $250,000 per bank, per customer.

In terms of ATM fees, each credit union has a network of fee-free machines in particular areas. If you're outside of that area, you'll likely have to pay an out-of-network ATM fee, says Espinal.

That's also true with major banks though – for instance, if you are a Citibank customer and use a Chase ATM, you'll pay an out-of-network fee for using a Citibank machine. But the major banks typically have more ATMs in more locations than credit unions.

Community bank

Espinal refers to community banks as somewhere between major banks and credit unions.

With a community bank, you'll get "more personalized service than what you may experience in a major bank," says Espinal. But you might miss out on some of the conveniences a major bank offers – like depositing checks via the bank's app.

That being said, you'll get many of the "same products and services that a major bank would offer," says Espinal, but with the customer service of a credit union.

Fintech banking

Espinal says that fintech banks (short for financial technology) are mobile-only banking options.

These banks don't have brick-and-mortar locations and generally market to a younger generation frustrated by the maintenance and overdraft fees that major banks often tack on, says Espinal.

The benefits of fintech banks include good mobile banking experiences and lower fees than major banks, and sometimes also credit unions. The risk with fintech banks is that they're new so they can struggle to maintain and raise capital, says Espinal.

The fintech apps may or may not be able to offer you an account where your money is FDIC insured. Accounts in these apps are not insured directly by the federal government. But sometimes a mobile-only bank will partner with a major bank that is FDIC insured, says Espinal. You'll want to check the terms and conditions carefully before signing up.

Diversify your account

You don't have to pick just one institution or bank. Espinal says to look into "diversifying where you put your money." She keeps her savings in a high-yield account with an online-only bank and uses a major bank for her checking account.

Whatever options you go with, Espinal says whenever you open an account with a bank, you're not just saving your own money. "Think of it as a loan. You are lending your money to that credit union, to that bank, to that institution, to that app." Banking doesn't have to be passive – you can actively decide what to do with your money.

Editor's note: Citibank and Bank of America are among NPR's financial supporters.


The audio portion of this episode was hosted and reported by Marielle Segarra, produced by Margaret Cirino and edited by Meghan Keane.

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