November 10, 2023

How to Choose a Bank: Important Factors to Consider

The banking landscape has changed rapidly in the 21st century with more bank options than ever –– from online banks and credit unions to traditional brick-and-mortar banks. But how do you sift through the options and zero in on the one that aligns perfectly with your unique needs?

By understanding your financial needs and the range of options out there, you can learn how to choose a bank.

In this comprehensive guide, we’ll discuss the various types of banks, what to look for in a bank, and how to choose one. We’ll also take you through practical tips and tricks to choose the right bank for you.

Types of banks

The banking world is as diverse as it is essential. With an array of institutions each designed to serve specific needs (almost all of which provide debit and credit cards), understanding the core types can deeply inform your financial decisions. Here's a brief overview of some of the primary types of banks:

Traditional banks

Traditional banks are physical, full-service institutions that have been the cornerstone of the banking industry for generations. These banks offer a wide range of financial products and services, usually including checking and savings accounts, loans, mortgages, and investment products.

Traditional banks have physical or brick-and-mortar branches, which provide face-to-face customer service, on-site ATMs, and other services like safety deposit boxes. As such, these banks tend to have a well-established presence in their surrounding communities and a certain ease of access.

Online banks

Online banks, sometimes called digital banks or internet banks, operate entirely online without any in-person branches. These banks provide convenient, easy access to banking services through websites and mobile apps.

Online banks often offer significantly higher interest rates on savings accounts and charge low fees. That’s because of their reduced operating costs (no physical locations), which these banks then pass on to customers by paying higher interest rates. They can be ideal for customers who prefer managing their finances online and want 24/7 access to their accounts.

Credit unions

Credit unions are member-owned, nonprofit financial institutions that operate similarly to traditional banks but with a cooperative structure. As member-owned organizations, credit unions prioritize the interests and values of their members, offering competitive rates on loans and savings accounts.

Credit unions often provide a more personalized customer experience and may have more lenient eligibility requirements than traditional retail banks.


Neobanks, also called challenger banks or fintech banks, are new and often innovative digital-only banks that use technology to deliver banking and investment services. Like online banks, neobanks usually operate without physical branches and provide mobile-first services to customers.

Neobanks also typically offer user-friendly interfaces, quick account setup, and real-time transaction notifications. While they may not offer as many products as traditional banks, they appeal to younger customers seeking superior, streamlined, or specialized digital banking.

Bank fees and interest rates

Choosing a bank means navigating a whole range of fees and interest rates. To make informed financial decisions, understanding what these charges represent and how they impact you is essential. Let's delve into some common U.S. banking fees and interest rates:

- Account maintenance fees: Some banks charge monthly fees to manage your account. Look for fee waivers based on minimum balance requirements or direct deposits.

- Overdraft fees: When you spend more than you have, banks typically charge your account with overdraft fees. Monitor your balance, consider overdraft protection, or opt out of overdraft services altogether to help avoid any additional charges.

- ATM fees: Banks may charge for using out-of-network ATMs. To steer clear of such fees, choose a bank with a large ATM network, and only use designated ATMs, or a bank that will cover your ATM fees wherever they arise.

- Foreign transaction fees: If you frequently travel internationally, choose a bank with no or low foreign transaction fees.

- Interest rates: Compare interest rates on savings, certificate of deposit (CD), and money market accounts. Higher rates mean higher earnings on your savings over time.

- Loan interest rates: When seeking a loan, be sure to compare interest rates to minimize borrowing costs.

Which bank is right for you? 8 tips to consider

Choosing a bank means forging a long-term partnership. Just as one size doesn't fit all in clothing, the same goes for banking—what's ideal for one individual might not suit another at all. Whether you’re opening your first account or re-evaluating your current financial affiliations, deciding on a bank aligned with your financial goals and lifestyle is key.

Here are eight tips to ensure your banking partner is in harmony with your needs:

1. Assess your needs

Take a look at your financial goals and spending habits. Do you need loans, credit cards, or investment services? Think through whether you want to prioritize in-person customer service, digital banking convenience, or competitive interest rates. Does what your bank invests in matter to you?

2. Explore account options

Look for a bank that offers various account options that fit your needs. Consider checking and savings accounts, CDs, money market accounts, retirement accounts, etc.

3. Size up fees and charges

Carefully review a bank's fee schedule for account maintenance (any annual fees?), overdrafts, ATM usage, and foreign transactions. Look for banks with a transparent fee structure and fee waivers based on account balances or direct deposits.

4. Check branch and ATM accessibility

If you value in-person banking, choose a bank with conveniently located branches and ATMs within your area. Alternatively, online banks can offer extensive ATM networks for similar fee-free access to your cash.

5. Check your online banking options

For the convenience of digital banking, check out different banks’ mobile apps and websites. Consider features like mobile check deposits, real-time account alerts, and transfer options.

6. Assess customer services

Read customer reviews and evaluate the bank's reputation for responsiveness and the typical customer service experience.

7. Look for FDIC or NCUA insurance

Always make sure the bank is insured by the Federal Deposit Insurance Corporation (FDIC) or the credit union is insured by the National Credit Union Administration (NCUA). This government insurance protects your deposits up to the maximum limit (usually $250,000) in case the bank encounters difficulties.

8. Assess community involvement

If supporting your community is important to you, find a local bank that engages in community development.

Whatever you choose, EarnIn has your back

No matter which bank you choose, EarnIn is here to support your financial journey and empower you with the resources and knowledge you need to navigate financial challenges confidently.

The EarnIn app offers valuable tools to help you take charge of your money. Like Cash Out which lets you access your wages as you work — up to $100 a day and up to $750 every pay period — so you have what you need to keep moving forward, whatever life sends your way.

Download the EarnIn app today and experience money at the speed of you.

Please note, the material collected in this post is for informational purposes only and is not intended to be relied upon as or construed as advice regarding any specific circumstances. Nor is it an endorsement of any organization or services.

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