Are you considering a change in your banking options? It can feel overwhelming to leave your current bank and seek alternatives. You might wonder if better choices exist. Yanely Espinal, author and director of educational outreach at Next Gen Personal Finance, provides insightful advice on how to find a banking institution that aligns with your values and needs.
Major Banks
Major banks like Chase and Citibank offer easy access to your accounts. Espinal highlights the convenience of using debit cards at ATMs nationwide. These banks provide a wide range of accounts and online banking services, such as loans and credit cards. However, they might charge monthly maintenance fees between $4 and $25 if minimum balances are not maintained. Recently, some major banks have started waiving these fees. Moreover, the FDIC insures deposits up to $250,000 per bank, ensuring your funds are secure.
However, some banks face penalties for unethical practices. For example, Bank of America was ordered to pay over $100 million for double-dipping fees and opening unauthorized accounts. Major banks including Wells Fargo and U.S. Bank have also paid significant fines. Be mindful of the practices of these institutions.
Credit Unions
Credit unions operate differently from major banks. As not-for-profit organizations, they prioritize members’ interests and offer competitive fees and savings rates. You may qualify for membership based on geography or employment. Espinal mentions that service members can access Navy Federal Credit Union. Credit unions are insured by the National Credit Union Administration, protecting up to $250,000 per account.
While credit unions have their own ATM networks, charges apply when using machines outside these networks. This limitation is similar to major banks; for instance, Citibank customers might incur fees using a Chase ATM.
Community Banks
Community banks blend features of major banks and credit unions. Espinal notes they offer personalized service like credit unions. However, they may lack conveniences such as mobile check deposits. Despite this, community banks provide products comparable to major banks, but with enhanced customer service.
Fintech Banking
Fintech banks, relying solely on mobile platforms, appeal to younger customers disillusioned by traditional banks’ fees. They typically provide competitive mobile banking and lower fees, sometimes surpassing credit unions. Espinal cautions about fintech banks’ financial stability and capital challenges. Additionally, fintech accounts might not directly offer FDIC insurance, so conditions must be thoroughly checked. They might partner with insured major banks.
Diversify Your Accounts
There’s no need to commit to one bank. Espinal advises exploring various options for your money management. She maintains a high-yield savings account with an online-only bank while conducting checking through a major bank.
Remember, banking is not just about storing money. Espinal encourages viewing it as a strategic decision; you’re loaning your funds to the institution. Actively choose how you manage your finances.
Editor’s note: Citibank and Bank of America are financial supporters of NPR.
This information was reported by Marielle Segarra and produced by Margaret Cirino, with editing by Meghan Keane. We’d love your feedback at [email protected]. Tune in to Life Kit on Apple Podcasts or Spotify, or subscribe to our newsletter.