If you’re going to open a new bank account, choose wisely. Switching accounts is a time-consuming process, and mistakes can be expensive. But living with an ill-fitting account can drain your time and your account balance. It may be time for a change, but make sure it’s the right change.
Basic banking services are pretty similar from bank to bank, so focusing on a few key features can help you narrow down your list and rule out choices that don’t fit your needs.
One of the most important features of your next bank account should be an affordable fee structure. Preferably, you can bank without paying any fees at all. Bank charges eat away at any money you manage to save in your account, and automatic monthly maintenance charges put you in catch-up mode before even get a chance to use your account.
Free checking is not dead. Finding a fee-free account is especially easy if you’re open to online banking, but you should be able to find free checking at brick-and-mortar institutions in most areas, as well. Credit unions, in particular, are an excellent choice for free checking, and small local banks are also worth checking out.
If you need some ideas, see some of the best checking accounts currently available.
If you can’t find a completely free account, getting fees waived is the next best thing. Many banks and credit unions that charge maintenance fees also offer ways to dodge those fees: If you meet specific criteria, you don’t need to pay certain fees. For example, if you set up direct deposit with your employer or keep a minimum amount in your account throughout the month, you can avoid monthly maintenance fees.
Reasonable Overdraft and Insufficient Funds Options
Some fees automatically come with your account, and others are the result of transactions in your account. Overdraft protection is an optional service that you can add to your account, but that’s probably a bad idea if you’re actually going to use the service. Banks and credit unions may charge $35 or so for the privilege of using your debit card to buy something when your checking account is empty.
Still, you may end up paying insufficient funds fees even if you opted-out of overdraft protection (opting-out only affects one-time debit card transactions). Those fees are similar to overdraft charges. If you’re paying them, it’s worth finding out if your bank has a more affordable solution. You might be able to set up a transfer from your savings account (which might cost more like $10 or so) or an overdraft line of credit instead.
Most banks have a website that enables you to view your account balances and move money between accounts. Most banks also offer apps and mobile websites optimized for your phone or tablet (and those apps all do more or less the same thing). So what should you look for in your next bank’s app?
In the age of online banking, there are very few situations in which you need to physically go to a branch (which could mean dealing with traffic, lines, and limited banking hours). Depositing a check was traditionally one of those situations—you want to get the check into your account safely and quickly.
Fortunately, you can also deposit checks by sending a picture to your bank—no teller required. The service is typically free, and you might even be able to get deposits into your account after standard branch hours. Almost any mobile device with a camera will do the trick, but it’s a good idea to make sure your bank has an app for your device.
You might not receive many checks, but when you do, it’s nice to skip unnecessary visits to a bank branch. Checks are still used for several major transactions when your life is in transition: a new job, a new apartment, and so on. Mobile check deposit makes those transitions a lot easier.
As a runner-up—especially if you occasionally need to deposit cash — you might opt for a bank with numerous local ATMs that accept deposits.
Online Transfers and Bill Pay
Money is electronic. Make sure you can take advantage of that fact.
At a bare minimum, your checking account should include free online bill pay. You need the ability to schedule payments from anywhere, anytime (whether your bank prints and mails a check or sends the funds by ACH).
Another critical feature is the ability to transfer funds to another bank account. You might keep accounts at several different banks, each serving a different purpose: One bank might pay a high APY on savings and another might offer a convenient ATM network. Physically moving cash around—or even using checks—is cumbersome, and wire transfers are too expensive for everyday use. Pick a bank that makes bank-to-bank transfers easy so that you can move money with just a few clicks.
Want to send money to friends and family (to pay for your share of dinner, for example)? Some banks provide person-to-person (P2P) payment services, as well. For the most part, these services are bank-specific, and they’re most useful when everybody involved uses the same bank. If everybody has a different bank, which is most often the case, there may be better options.
Money isn’t always electronic. Whether you’re headed to a restaurant that doesn’t accept plastic or you’re buying used items on Craigslist, sometimes old-fashioned cash is the only way to go.
Getting cash is as easy as visiting an ATM, and there is no shortage of those, but you’ll pay several fees if you use an ATM that isn’t part of your bank’s network. After your bank and the ATM operator ding you, those fees may end up being relatively high in percentage terms.
If you go to an ATM more than a few times per year, find a way to minimize those fees. You can always use ATMs that are part of your bank’s network for free (or, if you use a credit union, there’s a good chance you can visit a different credit union’s ATM at no charge).
If using in-network ATMs is not an option, try using a bank that reimburses your ATM fees. Numerous banks (online and brick-and-mortar) offer this feature. Be sure to read the fine print to find out about any limitations. Banks may have a maximum dollar limit each month, and other restrictions may apply.