Are You Getting the Most Bank for Your Buck?


Banking Smart

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If you’re like most people, you’ve probably picked a bank because of its convenient locations, or maybe you got a “special offer” of cash back if you opened an account there. Both compelling reasons, to be sure. But there are plenty of other considerations too; and with more than 10,000 FDIC-insured financial institutions now vying for your money, you can afford to be picky. So it’s worth checking in with yourself regularly to make sure you’re getting all you need from your current bank. (There’s a reason why one in 10 consumers changed banks last year.)

Of course, everyone wants the best service for the lowest fees. But maybe a (relatively) high-interest savings account, or a low-interest loan or credit card is also a top priority. You might be a one-stop-shopping type who wants someplace that offers everything from accounts to credit cards to mortgage loans. Or maybe you’re a high-balance account holder who wants a bank that will reward you for that with red-carpet service. Or you prefer to do your banking online and seek a bank with the best web and mobile services. 

No matter what you want, there’s bound to be a bank or credit union that can provide it. But it can take a little research to help you find the right choice. To get you started, we’ve highlighted seven common criteria and how to find the best financial institutions for each. 

So, you’re a people person.

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If you prefer to do your banking in person and enjoy feeling like a member of the family when you visit your local branch, you might want to go with a regional bank or local credit union, which is a nonprofit organization designed to serve its members. Credit unions typically score higher on customer service than banks and are more likely to have a real person answer the phone when you call with a question. However, big banks typically have more to offer in terms of products and services, ATM access and locations. If you travel frequently, you are probably better off choosing a national bank with branches throughout the country, but if you are someone who tends to stay close to home, you might opt for a more local option that can offer a friendlier and more personalized approach. 

Test out a bank’s style by visiting a branch in person and also calling their customer service number. Observe how the representatives greet and interact with you. Did they make you feel special or like you were just a number?  The site also provides more information on credit unions and how to find one in your area. 

Technology, not tellers please.

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Tellers, shmellers. You do most or all of your banking on your laptop, tablet or smartphone, so you prefer a bank with the latest web and mobile technology. Some of the institutions offering the best mobile apps right now include American Express, BBVA Compass, Bank of America, Capital One, City Bank Texas, Mercantile Bank of Michigan, USAA and U.S. Bank, according to a recent report by American Banker, the leading information resource serving the banking community. Among the best features that these apps offer are the ability to easily transfer money between accounts, temporarily turn off cards that are lost or stolen, deposit checks remotely, bump money between phones, and partnerships with PayPal, Mint and other money management entities. The report also highlights a new alternative to traditional banking called Simple that boasts super low fees, convenience--including free access to 50,000 ATMs and photo check deposits--and an innovative budgeting tool (FYI, you need to have an Apple or Android phone and request an invitation to join that can take a few weeks to receive).

You prefer one-stop-shopping for your financial needs.

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If you want the Target or Macy’s of banks, then you’ll likely want to lean towards a national bank. Big national banks tend to offer the most comprehensive products and services, including business banking, investments, financial planning, loans, credit and, in some cases annuities and insurance, so that you needn’t go anywhere else for your financial needs. This can be very helpful, especially for young families who might be planning to buy a home, save for their children's education and retirement, and possibly finance a small business. In addition, the convenience of online banking that big banks offer is a big plus for those with hectic schedules. While the fees, minimums and rates might be higher than those at smaller banks, the one-stop-shopping capability of big banks might be worth it to you. Some of the top U.S. retail banks include Chase, Bank of America, Wells Fargo, PNC, TD Bank, U.S. Bank and Citibank

To find out how much bank you can get for your buck, make an appointment to meet with a personal banker to learn about their bank’s offerings and incentives for bundled services. However, keep in mind that cheaper and better products might be available at other institutions if you are willing to shop around.

You want the red-carpet treatment.

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Most banks will treat you like a queen, provided you have enough money to make it worth their while. Big banks, in particular, work hard to woo wealthy clients with a plethora of “private banking” incentives, just like casinos offer big gamblers the high-roller treatment of comped rooms and other perks. Both want to lure those kind of customers to stay and give them as much money as possible. Some banks, like Wells Fargo and Bank of America, focus on the “mass-affluent market” with investable assets of $250,000 to $1.5 million, while other banks, like Chase and Bank of New York Mellon, target those with $3 million to $10 million. 

If you manage to qualify for private banking, you can count on concierge-style service for banking chores like opening and managing different checking and savings accounts as well as for comprehensive financial services including retirement and estate planning, wealth management, and business succession planning (if applicable). You can also expect higher rates on interest-bearing accounts and CDs and expedited service on loan and credit applications. Plus, there is typically more flexibility when it comes to negotiating bank fees, interest rates and closing costs for mortgages, lines of credit and other loans. Even if you don’t have $250,000 yet to invest, if you have at least $10,000 to put into a checking or savings account or can maintain a minimum monthly balance, you can usually qualify for better rates and waived fees. Bankrate’s checking section will let you compare current bank account deals.

You want a budget-minded bank.

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If you’re struggling with debt or have a fluctuating bank balance, you probably want to find a bank with low fees and account minimums. Many banks tease consumers with ads for "free checking," only to surprise them with the fact that they need to meet certain requirements to avoid fees. According to WalletHub’s 2013 Checking Account Transparency Report, the average checking account has around 30 different fees associated with it! For example, banks commonly require a minimum balance of $1,500 to qualify for free checking and customers who fall below this balance are charged a service fee. Overdraft fees are another major source of recurring income for banks in addition to other fees related to deposits, withdrawals, check-writing, direct deposit, online banking and paper statements. 

You would think that bigger banks with more resources and larger scale would tend to charge lower fees than smaller banks, but in fact the opposite is true. Local credit unions typically offer better deals for the average consumer than other banks. Internet banks, which benefit from lower overhead expenses, also tend to be more budget-friendly than their brick-and-mortar counterparts. When shopping around, make sure you’re clear on all of the potential fees and restrictions, some of which may be well hidden on a bank’s website. Check out Top 10 Reviews’s online-only bank reviews, which ranks the top banks by several criteria. 

You want a low-interest loan.

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When you’re in the market for a loan--whether it’s to buy a home, a car or finance a business--shopping around is important. Some banks try to lure borrowers with various incentives while others want to avoid unnecessary risk by making it harder than ever to get approved (especially since 2008). 

In general, smaller local banks and credit unions offer better rates and less stringent application requirements for loans. They also offer the added benefit of more personal service, reducing the chances of application information getting lost or miscommunicated, which is most common with Internet banks (though their rates are competitive too). The catch is that sometimes not all types of loans are available. Bigger banks are more likely to offer a wider variety of financing services and can offer a lot of savings if you have stellar credit (like 740+) and other assets invested with them. 

When it comes to small business lending, the total number of bank loans fell more than 10 percent from June 2007 to June 2011, according to FDIC data. However, while big banks have sharply cut their small business lending, community banks have really stepped up. Since 2007, small-business loan volume at small banks grew by $17 billion as of June 2011. According to the Small Business Administration (SBA), some of the top most active small business lenders as of mid-2013 include Wells Fargo, Live Oak Banking Company, U.S. Bank, JPMorgan Chase, and Huntington National Bank. allows you to search for and compare rates for most loans. Before signing anything, make sure you also research your potential lender’s credit rating through Bankrate’s “Safe & Sound” system.  

You want your bank to do good.

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What happens to your money once you put it in the bank? That’s a good question. The answer is usually murky and unsatisfying, involving complex investing strategies for big profits that help pad the wallets of bank execs. If that idea makes you uncomfortable, you might be interested in putting your money to work helping needy communities instead. These more karma-minded organizations are called Community Development Financial Institutions (CDFIs). The first CDFIs emerged as private organizations aiding federal efforts to alleviate poverty and racial discrimination in the 1960s and 70s, such as South Shore Bank in Chicago and the Santa Cruz Community Credit Union. Today, there are over 1,000 CDFIs in the U.S., thanks to funding from the government agency CDFI Fund and private investors. 

There are six types of CDFIs, but for personal banking, look for Community Development Banks and Credit Unions. Besides the usual banking services, these CDFI options also offer a way for you to focus your money in a specific loan fund that provides you with a return on your investment and allows you to directly support communities across America that otherwise would not have access to traditional sources of financing. To find a CDFI bank or credit union in your area, you can try searching the CDFI Fund’s database. You can also find community banks that may not have necessarily applied for CDFI status from the federal government by searching here

You want the best return. Period.

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Granted, with interest rates still relatively low these days, it is nearly impossible to find a bank savings account return over 1.00 percent. However, if your primary banking goal is to earn as much interest as possible on your savings, then you probably want to go with an Internet bank that can trade a better return for low overhead expenses. Charles Schwab Bank, FBNO Direct and Capital One 360 offer interest-earning checking accounts with no minimum balance requirement and no monthly fee. In terms of savings accounts, SmartyPig, GE Capital Bank, Ally Bank and EverBank are currently offering the best deals. SmartyPig is an FDIC-insured Internet bank where you can set up and track savings goals and--get this--be rewarded for reaching them! SmartyPig account holders who meet their targets can (but don't have to) use those funds to purchase gift cards that provide a cash-back reward of up to 14 percent. The reward can be deposited into a new savings account or added back onto the card. Now that’s a competitive return! Ally Bank by far leads the pack in terms of CD rates, but if you prefer the idea of banking in person, a community bank or credit union will likely offer better rates and lower fees than national banks. The exception is for higher net worth customers who have enough investable assets to entice the big banks to offer rate and fee deals to lure them as investors. Check to search for the best checking and savings accounts, and CD deals.

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