Overdraft fees and difficulty resolving disputes, opening accounts and accessing money top the list of complaints that the Consumer Financial Protection Bureau regularly gets about banks. Fortunately, there are a growing number of alternatives to the traditional big banks — some offering higher returns, better service and peace of mind.
If you are shopping for a better bank or considering doing so, the following tips will aid you. Once you’re ready to make a jump, be sure to check out “5 Simple Steps to Painlessly Switch Banks.”
1. Shop interest rates
If you’ve got money sitting in a savings account, CD or money market account, you’d be remiss not to shop for the best interest rate.
After years of languishing, rates are inching up. Although the national average return on savings accounts is just 0.09 percent annual percentage yield (APY) there’s a substantial spread among different institutions. And you can even find interest-earning checking accounts.
One place to compare interest rates on CDs and checking and savings accounts: the Money Talks News Solutions Center.
2. Look into online banking
If you peruse a list of savings accounts, you’ll notice that some of the highest interest rates are paid by institutions that are unfamiliar. That’s because there’s a growing number of newer banks that do business solely online. They don’t need to maintain a network of brick-and-mortar branches, so their expenses are lower, which can mean they pay higher interest rates and charge lower fees.
One of our online favorites is CIT Bank which, as of this writing, is paying 2.45 percent APY on savings accounts. That’s nearly three times the national average return, and far more than most big banks offer.
One caveat: Online banks generally don’t have their own ATMs. They rely on agreements with banking networks. So, if you think you will need ATMs to access your account with any regularity, note an online bank’s ATM policies and costs before switching banks. Look for one that waives or reimburses you for any ATM fees you might incur.
3. Explore credit unions
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 accounts you qualify for at a variety of institutions. For more pointers, check out “How to Pick the Best Credit Union for You.”