Searching for the Best
A lot of websites promote lists of the best banks to bank with. While these articles may be helpful, they have limitations. First, some websites only recommend banks that they have “arrangements” with; by referring customers, the publisher earns a few bucks from the bank when you open an account (that’s not how this article was written; I’m not aware of any such arrangement with the companies listed here and I don’t earn a referral fee if you open an account).
Lists of banks also tend to make general suggestions without understanding your needs. They can tell you which banks have the highest rates, but that may not be what you most need as a consumer. Finding the best bank for you is about figuring out what you need -- before you even look at any names.
If you want to take this route (of evaluating your needs first), read How to Choose a Bank.
All that said, sometimes readers just want to get a specific suggestion. So, if you’re looking for an online bank, you can’t go wrong with any of the big names. They’re all good at what they do, and they pay competitive rates. If you need specific names, start with ING Direct, Ally, or USAA. They may not always have the highest rates, but they’re generally quite good.
As you decide which bank to bank with, be sure that you bank safely. If there’s any chance of losing your money, even the best bank features become way too expensive. Verify that any bank is FDIC insured and that credit unions are NCUSIF insured. Keep your account balances below the maximum insurance limits.
You may be surprised to find how well a small institution can meet your needs. Local banks and credit unions should be on your list as you research accounts. In addition to offering the same services you get from big banks (sometimes with better rates) they have a few unique benefits. For example, they’re an important part of the community you live in; any money you deposit is likely to help businesses and consumers nearby.
At small institutions, you’re more likely to enjoy personal service and relationships with the people at the bank. If you can’t stand the idea of talking to somebody in an out-of-state call center, go local. It’s also nice to resolve problems in person sometimes (if you ever have problems). At a large bank, you’re one customer out of millions, and sometimes you really notice it.
Is a credit union or a bank better? Either one will probably do the trick. Look for an institution that has the products and services you need, and that will be easy to work with (with branch locations and hours, website functionality, and so on).
Banking on the Road
If you’re a road warrior, a local institution might not be the best place to bank. Large national banks will offer more branches and ATMs, so you’ll be able to get things done on the road and minimize fees. You’ll find branches everywhere -- even in grocery stores. However, a small credit union can serve your needs anywhere in the country if it’s part of the CU Service Network. You can handle most routine transactions at any other credit union branch, even if you’re not a member.
Need the Highest Rates?
If you just want to earn the highest rate on your cash, you’re going to find that the best bank changes frequently. It’s not uncommon for banks to move from the head of the pack to somewhere in the middle after collecting the assets they were looking for. Unless you have a ton of cash and are an experienced rate-chaser, it’s rarely worth it to switch for better rates.
Transferring money from one place to another may mean that your cash goes a few days without earning interest, and that loss of earnings can wipe out any benefit you get from a higher rate. In addition, opening new accounts to get a better rate is time-consuming. Before you get carried away, figure out if you can earn more doing other things.
Once you’ve figured out which bank is the best to bank with, you’ll need to move your money. This process can create problems, so take your time and do it carefully. Any hiccups can result in extra fees and even cause damage to your credit scores. To get through it smoothly, read How to Switch Banks.