You can save money and headaches by finding a new and better bank. Here's what to consider and where to look.
I was riding with a good friend recently when I asked her to pull over at the bank so I could use the ATM.
“No,” she said. “I’m not going to Wells Fargo,and neither should you. It’s time you got a new bank.”
She had a point. As you have no doubt heard, Wells Fargo recently paid $190 million in fines because, the Consumer Financial Protection Bureau says, thousands of bank employees opened about 2 million deposit and credit card accounts in customers’ names — without the customers’ knowledge or consent. Widespread fraud, in other words.
The workers apparently were trying to meet sales targets and earn bonuses. Customers ended up with fees and fines as a result.
No one opened a phony account in my name (to my knowledge). I’ve been a happy Wells Fargo customer for years. And I’d had mostly positive experiences with the bank and their online services.
But here’s my friend’s point: We can’t complain about companies engaged in shady practices if we keep doing business with them. So now I’m one of the 30 percent of Wells Fargo customers who tell pollsters they’re actively exploring leaving the bank.
Fraud is just one powerful reason to shop for a new bank. Overdraft fees and troubles with resolving disputes, opening accounts and accessing money top the list of complaints that the CFPB regularly gets about banks, especially about Bank of America, JPMorgan Chase, Wells Fargo and Citibank.
If you, like me, are shopping for a better bank, here are 11 tips to aid your search:
1. Consider an online bank
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More than half of Americans do most of their banking online, an American Banking Association survey recently revealed. If you are among them, you may find that there’s lots to like in banks doing business solely online. Capital One and Ally are two of the more familiar of these “internet banks.” They don’t need to maintain a network of brick-and-mortar branches, so their expenses are lower, which can mean higher savings account interest rates and lower fees, NerdWallet says.
Here’s a possible issue: Online banks don’t have their own ATMs. They rely on agreements with banking networks whose ATMs you use. That means you’ve got to watch out for higher fees on the network of ATMs available to you. Takeaway: Know the ATM policies and costs before switching banks. Best of all, find an internet bank that rebates or covers any ATM fees.
2. Look for a bank with convenient branches
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If you value face-to-face contact with a bank, you’ll want to find a credit union or bank with many convenient branches where you live and work. Start your research by noticing which banks you see in the neighborhoods you frequent. Go to the website of each bank you’re considering and find its branches nearest you. Pay attention to hours and ATM locations.
3. Explore credit unions
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One excellent way around fees and bureaucracy is to go small. Credit unions may offer the personal service you crave with the lower fees and higher interest rates you need. Also, they have a reputation for focusing on fair lending and investing in communities. Just don’t assume you’re getting a good deal without comparing the fees on checking accounts you qualify for at a variety of institutions.
4. Check into community banks
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Community banks are owned and operate in local communities. They are not owned by mega-bank holding companies. Many community banks (but not all, so check) pride themselves on keeping fees low and on making loans within the local community.
Use the Independent Community Bankers of America’s community bank locator to find community banks near you.
5. Make sure your new bank is insured
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Before switching to a new credit union or bank, confirm that it is insured by the Federal Deposit Insurance Corp. Why bother with the FDIC? It insures that if a member bank fails, depositors — you and I — get our money back up to $250,000 per depositor per insured bank. Action plan: If you keep more than $250,000 in a bank, spread your funds among more than one bank or credit union so all your money is insured.
Use the FDIC “BankFind” search tool to check whether the institution you are considering is a member.
6. Research ATM networks and costs
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ATMs are a big part of the consumer banking experience. You’ll want your new bank or credit union to have lots of ATMs that cost you nothing to use and are in safe, convenient locations. Go onto each institution’s website to find its list (or map) of in-network ATMs. Visit the locations you’ll use most to be sure you’ll feel comfortable there.
Also, learn about the ATM fees, both for in-network ATMs and for those out-of-network. Read the fine print on the bank’s site, brochure or contract, or ask a banker to explain the ATM policies to be sure you won’t be hit with expensive fees after you’ve chosen a new bank.
Here’s an example of what to look for: Bank of Internet USA’s rewards checking, recommended by NerdWallet’s “Best Banks for ATM Lovers,” gives customers free use of any ATM in the U.S. and offers unlimited reimbursement of any fees imposed by the ATMs’ owners.
That’s a great deal. But there’s a caveat: When using an ATM outside the U.S., you’ll pay a 2 percent fee to withdraw your money. That may not matter if you rarely leave the U.S. But if international travel is a part of your life, you may need to keep shopping. The lesson: Read all the fine print to understand a bank’s entire ATM policy.
7. Decide if free online bill payment matters
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if you love the convenience of paying bills online through your bank’s website, make sure the bank you are considering has the service and check to see if it imposes a fee for using it.
8. Learn about the mobile app
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The ability to check your balances and make deposits makes mobile banking one of life’s real conveniences. Great mobile apps are expensive features for banks to develop, which means that the biggest banks have some of the best mobile apps.
NerdWallet rates mobile apps from a couple of dozen of the biggest banks and credit unions. Its favorites are apps from Ally Bank, PNC Bank, BMO Harris Bank and Alliant Credit Union.
9. Ask your friends
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Some bank features are harder to research. My satisfaction with Wells Fargo, for example, had much to do with the sophistication of its online banking interface. But although I found numerous recommendations for “online banks,” I found nothing about their online interfaces, even at Money’s Best Banks in America 2015-16, which rates banks for numerous features.
10. Compare interest paid on savings
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If you’ve got money sitting in savings, CDs or a money market account, you’d be remiss not to shop for the best interest rate. For years, interest on deposits was so low it was hardly worth asking the APY (annual percentage yield, the rate your money earns over a year, including compounded interest.) Now, though, you can find APYs of up to 1 percent or even a bit more on savings accounts.
One place to compare interest rates on savings: Money Talks News, where you can see many banks’ rates on CDs, interest checking and money market accounts.
11. Use online tools to research banks
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Here are two online tools that can help in narrowing your search:
- Money’s bank matchmaker delivers suggestions after asking your state, whether you care about in-person banking and how much money you’ll keep in checking and savings. You’re also asked to rank which matters most: no (or low) fees on account balances, no (or low) fees for using out-of-network ATMs, or high interest on savings. In a separate article, Money says consumers are much more likely to find zero ATM fees, zero fees on account balances and higher interest rates on deposits from online banks. Its top pick: Ally Bank. Money’s pick for a big bank: TD Bank. Its favorite mobile app: BBVA Compass.
- WalletHub’s bank search lets you choose the services you are interested in and offers an array of options, including large and small banks, community banks and credit unions. Users’ reviews of banks also are potentially useful. These reviews can alert you to things you might not know to watch for, such as some banks’ limits on free mobile transfers of funds. As always, be aware that product reviews found online may not really be from customers and that websites offering free financial tools usually want to sell you products or capture personal information from you.
What’s your experience changing banks? Share with us comments below or on our Facebook page.