There is no single best bank for everyone
The bank that works best for you depends on how you move money: whether you need to deposit cash, how often you transfer funds, what you pay in fees, and whether you want to talk to a person or handle everything online. A bank that charges no monthly fee but has few ATMs might be perfect for someone who rarely withdraws cash and perfect for nobody else. Before you choose, you need to know what you actually do with your account.
This guide walks you through the real differences between banks—what they charge, what they offer, and which situations favor which type of institution. You will find information about traditional banks, online-only banks, and credit unions, and how to match each to your actual banking pattern.
Key Takeaways
- Traditional banks charge monthly fees but offer physical branches and ATM networks; online banks charge no monthly fees but require you to deposit checks by phone camera or mail.
- Credit unions often charge lower fees and offer better loan rates than banks, but membership is restricted and ATM access depends on shared networks.
- The cheapest account for you is the one whose fee structure matches your habits—not the one with the lowest advertised fee.
- Compare what you actually pay per month across three banks before opening an account, because fee waivers and minimum balances vary widely.
- Switching banks takes two to four weeks if you move direct deposits and automatic payments; plan ahead rather than closing your old account first.
Traditional banks versus online banks: what you trade
A traditional bank operates physical branches where you can deposit cash, speak to a banker, and get a cashier's check the same day. Most charge a monthly maintenance fee—typically $10 to $15—unless you meet a minimum balance, usually $500 to $2,500. They maintain their own ATM networks, though you may pay a fee to use another bank's ATM.
An online bank has no branches. You deposit checks by taking a photo with your phone, withdraw cash at ATMs (usually through a partner network), and handle everything else through an app or website. Most charge no monthly fee and no minimum balance. The trade-off: if you need cash urgently or want to speak to someone in person, you cannot. If you deposit cash regularly, an online bank is not practical.
The monthly fee difference matters most if you carry a low balance or make frequent transfers. Someone with $300 in the account pays $120 per year at a traditional bank charging $10 monthly; an online bank costs nothing. Someone with $5,000 who meets the minimum balance requirement pays nothing at either.
Credit unions: membership, rates, and shared branching
A credit union is a member-owned cooperative, not a for-profit bank. Most charge no monthly fee and no minimum balance. They typically offer lower loan rates and higher savings rates than banks. The catch: you must be a member, which usually means working for a specific employer, belonging to a specific organization, or living in a specific area. Some credit unions let you join if a family member is already a member.
Credit unions do not all have their own ATM networks. Instead, they belong to shared branching networks—usually CO-OP or Alliant—that let you use thousands of ATMs and branches nationwide without a fee. If your credit union belongs to one of these networks and you rarely need cash, a credit union account costs less than a traditional bank account.
The downside is limited availability. If you move or change jobs, your membership may end. If your credit union is small, its app or website may be less polished than a major bank's. But if you can join one, the fee savings and loan rates usually make it worth the trade-off.
What to compare before you open an account
Do not compare banks by their advertised fee. Compare what you will actually pay. Write down three banks you are considering, then calculate your monthly cost at each one based on your real habits.
| Factor | What to check | Why it matters |
|---|---|---|
| Monthly maintenance fee | The base fee and what waives it (direct deposit, minimum balance, debit card use) | A $10 fee waived by direct deposit costs you nothing if you get paid by direct deposit; it costs $120 per year if you do not. |
| ATM access | How many ATMs the bank owns, and whether you pay to use other banks' ATMs | If you withdraw cash twice a week and pay $2.50 per out-of-network withdrawal, you pay $260 per year. A bank with more ATMs or a credit union with shared branching saves money. |
| Check deposits | Whether you can deposit checks by phone camera, by mail, or only in person | If you receive paper checks regularly and have no branch nearby, an online bank's mobile deposit saves trips but requires a camera-capable phone. |
| Overdraft fees | The fee per overdraft and whether the bank charges multiple fees per day or caps them | Some banks charge one overdraft fee per day; others charge one per transaction. If you overdraft by $50 and make five transactions that day, you could pay $5 to $125 depending on the bank's policy. |
| Savings account rate | The annual percentage yield (APY) on savings, which changes monthly | Online banks and credit unions typically offer 4% to 5% APY on savings; traditional banks often offer 0.01%. On $10,000, that is $400 to $500 per year versus $1. |
Call or visit the website of each bank and write down the actual numbers. Then multiply the monthly fee by 12, add the overdraft fees you expect to pay, subtract any interest you will earn on savings, and compare the total annual cost. The cheapest bank is the one with the lowest total cost for your specific situation, not the one with the lowest advertised fee.
How to move your money without losing access
Switching banks takes time. Direct deposits can take up to two pay periods to reroute, and automatic bill payments need to be reset one by one. Do not close your old account until you have confirmed that all incoming and outgoing payments have moved.
Start by opening the new account and getting your new account number. Then update your direct deposit with your employer or benefits provider—this usually takes one to two pay periods to take effect. Next, log into each bill you pay automatically (utilities, insurance, subscriptions) and update the payment method to your new account. Wait for one full pay cycle to confirm the direct deposit arrived, then wait another week to confirm all automatic payments cleared from the new account.
Only after both cycles are complete should you close the old account. Keep it open for at least 30 days after your last transaction clears, in case a payment you missed shows up late. Some banks charge a fee to close an account early; check the terms before you open it.
When a big bank makes sense, and when it does not
The largest banks—Chase, Bank of America, Wells Fargo, Citibank—have the most ATMs and branches. If you travel frequently, move often, or need to speak to someone in person regularly, a big bank's network is valuable. But you pay for it: their monthly fees are higher, their savings rates are lower, and their customer service is often slower.
A big bank makes sense if you use its services heavily: frequent cash deposits, regular branch visits, or a mortgage or investment account you want to keep in one place. It makes less sense if you have direct deposit, rarely withdraw cash, and do not need a branch. In that case, an online bank or credit union will cost you less and pay you more interest.
Frequently Asked Questions
Can I have accounts at multiple banks?
Yes. Many people keep a checking account at one bank and a savings account at another to take advantage of different rates and fee structures. The only limit is that banks report accounts to the FDIC separately, so each account is insured up to $250,000. Having multiple accounts does not affect your credit score.
What happens to my money if the bank fails?
The Federal Deposit Insurance Corporation (FDIC) insures deposits up to $250,000 per account holder per bank. If a bank fails, the FDIC pays you back, usually within a few business days. Credit unions are insured by the National Credit Union Administration (NCUA) with the same $250,000 limit. Your money is safe as long as you stay under the limit.
Do I need a minimum balance to open an account?
Most banks and credit unions do not require a minimum balance to open an account, but some waive monthly fees only if you maintain a minimum. Online banks almost never require a minimum. Check the specific bank's terms before you open the account.
How long does it take to open a bank account?
Online accounts usually open in minutes; you provide your Social Security number, address, and ID, and the bank verifies you instantly. In-person accounts at a branch take 15 to 30 minutes. You will receive your debit card in the mail within 7 to 10 business days, though most banks let you use your account immediately while you wait.
What if I have bad credit or a banking history problem?
Most banks and credit unions check ChexSystems, a banking history report, not your credit score. If you have unpaid overdrafts or closed an account with a negative balance, you may be denied. Some banks offer second-chance checking accounts with higher fees but no ChexSystems check. Credit unions are often more flexible than traditional banks.