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When you open a bank account, you're making a big decision. You'll probably interact with this account dozens of times per month, as it most likely will be where your paycheck is deposited and where you get cash and pay bills from. That's why it's so important to make sure you pick the right bank.
That's easier said than done, though, as there are tons of different financial institutions out there that each offer their own bank accounts with their own pros and cons. To help make it easier for you to decide, finance expert Dave Ramsey urges you to consider focusing specifically on two key issues.
Here's what Dave Ramsey says are the most important things to think about when picking a bank
In the guide to choosing a bank on the Ramsey Solutions blog, Ramsey lists many different things that can differentiate one bank account from another including:
- The different kinds of accounts on offer, such as checking, savings, and money market accounts
- The interest rate you're paid on money you put in the bank
- The fees you are charged by the bank, including minimum balance charges
- How many ATMs and branches there are so you can easily access your money without having to pay a fee for using a different bank's ATM
- How easy it is to work with the bank
- The customer service
- The bank's security
Focusing on all of these things can be overwhelming, though. That's why he also offers some guidance to simplify your decision. "The two things you really need to narrow down when choosing a bank are 1) what kind of bank you want, and 2) the features that matter the most to you," the Ramsey Solutions blog states.
How to focus on these two factors
Ramsey is right that the kind of bank matters, because this can narrow down which financial institutions you're willing to work with. You have three major choices for this type of bank, including a traditional bank, an online bank, or a credit union.
"With a traditional bank, you can choose a big, national bank or a smaller, community option," Ramsey said. "Honestly, there’s no upside to the massive name-brand bank unless you enjoy being treated like a nameless, faceless account number. On the other hand, a smaller community bank will often give you great customer service, and you get to know the people who are handling your money."
Online banks, on the other hand, are a newer alternative which Ramsey warns comes with little human interaction -- although online banks tend to offer lower fees since they have less overhead.
Finally, credit unions are member-owned nonprofits so they tend to be more focused on customer service and offer other perks such as paying you a higher interest rate on your money. But, as Ramsey points out, you need to be a member to join one and there may be fewer ATMs for you to use without fees.
Once you've chosen the kind of bank you want, you can decide what other key things are most important from Ramsey's initial list. For example, you may feel minimizing fees is your absolute top priority so you don't waste money. Or, you may care more about the interest rate you're offered or fee-free ATM access.
After deciding which of these criteria will most affect your happiness with your financial institution, you can pick the perfect online bank, traditional bank, or credit union by comparing that feature first. This way, you should end up with a bank you're happy with over the long haul.
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