What Are the Most Important Features to Consider When Shopping for a Bank?

Many people stick with the same bank for years out of convenience, whether because of a nearby branch or simply out of habit. However, re-evaluating your options can pay off in today’s dynamic banking environment. With rising interest rates, digital innovations, and competitive offers from traditional and online banks, now is a smart time for bank shopping.

When comparing banks, focus on the features that matter most to your financial life, such as:

• Account types and services that fit your needs
• Fees and charges that could impact your bottom line
• Interest rates for both saving and borrowing
• Digital tools and convenience, including mobile apps and ATM access
• Customer service quality and accessibility
• Security and deposit insurance to protect your money

Taking a strategic approach helps you find a bank that aligns with your goals and habits, whether you’re looking for better savings returns, fee-free checking, or superior digital tools.

The Most Important Features When Bank Shopping

While bank shopping might seem daunting, the potential benefits are substantial, especially considering how banking services have evolved.

If you’re ready to reassess your banking relationship, the following process will show you how to choose a new bank and help you identify essential services and evaluate them using modern, relevant criteria.

1. Decide which banking services you need

Since different banks excel in different areas, begin your search by determining your specific needs. This approach helps you focus on what’s most important for your financial situation. Consider these key questions:

What type of account do you want?

Remember that a bank offering excellent checking accounts may not necessarily provide the best savings rates. Focus your search on features that matter most for your specific account needs.

How will you use this account?

Consider factors like typical balance levels, branch visit frequency, and ATM usage patterns. These elements can affect available terms and overall banking convenience.

Which accounts need to be linked?

Having checking and savings accounts at one bank can facilitate easy transfers. However, being time-locked investments, CDs don’t necessarily need to be at the same institution. You might find better rates elsewhere.

Will you be over the limit?

For multiple accounts at one bank, remember that FDIC insurance limits are $250,000 per depositor (or $500,000 for joint accounts) across all accounts at a single institution.

2. Apply general decision rules to find a better bank

When shopping for a new bank, here are some universal guidelines that apply regardless of the account type you’re seeking:

Evaluate location importance

Consider how location impacts your banking needs. For accounts requiring frequent access, proximity matters more than it does for long-term investments like CDs that remain untouched until maturity.

If you’re comfortable with digital banking, physical branch locations become less crucial, though ATM accessibility might still be vital.

Explore online banking options

Digital-first banks typically offer more competitive terms than traditional brick-and-mortar institutions. Even established banks with extensive physical networks may offer special incentives for customers who opt for online banking services.

Assess digital capabilities

For those who prefer managing finances through digital channels, thoroughly evaluate the bank’s website functionality and mobile app features before committing.

Consider customer service quality

Customer support quality should be a key consideration when you’re bank shopping. Investigate their service hours, whether they offer 24/7 support, and how easily you can reach a human representative. Check if they provide live chat options and their typical response times.

3. Consider product-specific criteria for the best rates

After evaluating general banking features, focus on your desired account type’s specific terms and conditions.

Evaluating savings and money market accounts

These accounts are designed for interest earning while maintaining easy access, though they’re not meant for frequent transactions.

From a customer perspective, both account types share similar characteristics, so consider these guidelines when comparing options:

Focus on competitive rates, not just the highest

While some banks compete by offering premium rates, finding a consistently strong performer is key. Recent MoneyRates America’s Best Rates research revealed that top-tier savings accounts exceeded the industry average by more than a percentage point.

Though rates fluctuate, banks leading the quarterly America’s Best Rates rankings tend to maintain their competitive position over time.

Once you identify a top-performing institution, they’re likely to keep your rates competitive long-term, even if they’re occasionally slightly below the absolute highest rates available.

Be wary of promotional rates

When shopping for a new bank, be cautious of special promotional rates that typically expire within 30-90 days. Compare banks based on their standard ongoing rates rather than being swayed by temporary teaser rates. While earning extra interest for a brief period might seem appealing, it won’t significantly impact your long-term financial goals.

Pay attention to how rates change for larger account balances

When evaluating things to consider when shopping for a new bank, examine how savings and money market rates vary based on deposit amounts. Different banks structure their rates according to account balance tiers, so verify the rates applicable to your intended deposit size.

Shopping for CDs

If you’re comfortable locking away your funds for a set period, certificates of deposit (CDs) typically offer higher yields than standard savings accounts. Since CDs lock in rates for specific terms, the selection process differs from shopping for traditional bank accounts.

Finding the highest CD rate is critical

While competitive rates suffice for money market and savings accounts due to rate fluctuations, CD rates require more scrutiny since they remain fixed throughout the term. Securing the absolute best available rate when shopping around for a new bank’s CD offerings is crucial, as it determines your returns for the entire CD duration.

Focus your search on the length you need

CD terms range from one month to several years, with different banks excelling at different term lengths. Concentrate on the term length that aligns with your financial goals when comparing rates.

Find out about early withdrawal penalties

Early CD withdrawals incur penalties, which vary by institution. While rate competitiveness should be your primary consideration when shopping for a new bank, penalty terms can be the deciding factor between similar rates. Consider that unexpected expenses may arise, or rising rates might make it worthwhile to break your CD for a higher-yielding option. More modest penalties make this decision easier.

Following these guidelines will help you identify a bank offering competitive products tailored to your financial needs. Making the right choice can positively impact your finances for years to come.

Is There More to Choosing a Bank Than Just Picking the Best Rate?

What are the most essential features you want to consider when you decide to bank shop? While comparing rates on various deposit products is essential, it’s just one aspect of the decision-making process. Consider these additional factors:

Fees and Charges: Banks may charge various fees for services like monthly account maintenance, ATM withdrawals (especially out-of-network), overdrafts, wire transfers, and more. These fees can accumulate, so selecting a bank with low or no fees for the services you commonly use is essential to avoid unnecessary expenses.

Interest Rates: Interest rates affect both savings and borrowing. For high yield savings accounts and certificates of deposit (CDs), higher interest rates mean your money grows faster. If you plan on borrowing money in the future, comparing interest rates on loans offered by different banks is also essential.

Security and Insurance: One of the most critical features to look for in a bank is deposit protection. Make sure the institution is FDIC-insured (or NCUA-insured if it’s a credit union). This protects your deposits up to $250,000 per depositor, per bank, in the event of bank failure.

To verify coverage, use the FDIC BankFind tool or look for the FDIC emblem online or in-branch.

Also, consider security features like two-factor authentication, encryption, and fraud alerts to safeguard your accounts.

Convenience and Accessibility: Consider how you prefer to bank. Do you need frequent access to physical branches for in-person transactions or prefer the flexibility of online and mobile banking?

• Physical Presence: If you value face-to-face interaction or need to handle cash deposits regularly, consider banks with conveniently located branches near your home or workplace.
• ATM Network: Check the availability of ATMs and whether the bank offers a network of surcharge-free ATMs to avoid withdrawal fees.
• Online and Mobile Banking: Most banks now offer online and mobile banking services, but the quality and range of features vary. Look for user-friendly apps with features like mobile check deposit, bill payment, and account alerts.

Customer Service: Good customer service is invaluable when you have questions or encounter issues with your accounts. Look for banks with a reputation for excellent customer support, considering their availability (e.g., 24/7 phone support, online chat) and responsiveness.

Account Options and Features: Beyond basic checking and savings accounts, consider whether you need other products or services, such as money market accounts, certificates of deposit (CDs), investment accounts, or lending options like mortgages or personal loans.

How Many Bank Accounts Are Too Many?

Should you have only one bank? It depends on your situation. When you discover better rates for CDs, savings accounts, or money market accounts at another institution, consider temporarily maintaining your existing account. This approach allows you to ensure the new bank meets your expectations before fully transitioning.

However, compelling reasons exist to consolidate your accounts, provided you stay within the FDIC insurance limit of $250,000.

First, “jumbo deposits” exceeding $100,000 may qualify for preferential interest rates, particularly in high yield savings accounts. On average, high yield savings accounts offer rates higher than standard deposits. Distributing your funds across multiple banks could prevent you from reaching this advantageous threshold.

Additionally, larger deposits often unlock premium benefits like fee-free checking accounts and enhanced credit card terms that banks reserve for their high-value customers.

Monitor the market for several weeks to identify the most competitive options for your desired account type. Once you are confident in your choice, proceed with opening an account and consolidating your deposits within FDIC insurance limits.

What Is Most Important When Choosing a Bank?

As banks modify their fee structures to adapt to evolving financial and regulatory landscapes, understanding the most important features to consider when shopping for a bank has become increasingly crucial. While abundant information is available, effectively navigating it requires a strategic approach.

Start by examining your banking habits and needs rather than immediately comparing institutions. Consider asking yourself the following questions:

Do you maintain substantial deposits?

If so, prioritize interest rates when evaluating banks. Research and compare interest rates across bank accounts to maximize your earnings. For long-term savings, identifying banks offering competitive CD rates becomes exceptionally crucial.

Are you managing a modest checking balance?

Focus on finding institutions that still provide free checking accounts. While these offerings have become less common, they remain available. Special free checking accounts often cater to students and seniors over 50, so verify if you qualify for these targeted programs.

Do you frequently encounter overdrafts?

To break this costly habit, consider opting out of overdraft protection entirely. If that’s not feasible, prioritize banks with lower overdraft fees when shopping for a new bank.

Is travel a regular part of your lifestyle? Search for banks offering extensive ATM networks or those that reimburse out-of-network ATM fees. This feature becomes especially valuable when shopping banks if you frequently access your checking account funds while traveling.

By carefully evaluating these features and prioritizing those that align with your individual financial needs and preferences, you can choose a bank that will be a valuable partner in managing your finances effectively. 

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