The bank that works best for you depends on how you plan to use it

There is no single "good" bank because different banks serve different needs. A bank that works well for someone who needs to deposit checks in person might be wrong for someone who never visits a branch. Before you choose, think about what you actually do with money: Do you need to deposit cash or checks? Do you want to avoid fees? Do you need customer service you can reach by phone? Do you prefer to do everything online? The answers to these questions narrow the field much faster than looking at a ranked list.

The main choice is between a traditional bank with physical branches and an online-only bank. Traditional banks let you walk in, deposit cash, and talk to someone face-to-face. Online banks have lower fees because they do not pay for buildings and staff, but you deposit checks by taking a photo with your phone and you reach customer service by email or chat. Neither is objectively better—it depends on your life.

Key Takeaways

  • Online banks typically charge no monthly fees and pay higher interest on savings, but require you to deposit checks by phone photo and handle problems without visiting a branch.
  • Traditional banks with branches let you deposit cash and speak to someone in person, but often charge monthly fees unless you keep a minimum balance or set up direct deposit.
  • Credit unions are member-owned and often have lower fees than traditional banks, though they may have fewer branches and ATMs outside their network.
  • Check the bank's ATM network before you open an account—if you use ATMs often, a bank with few machines near you will cost you money in out-of-network fees.
  • Read the fee schedule for overdrafts, out-of-network ATM use, and monthly maintenance before you commit, because these fees vary widely and add up fast.

Online banks: lowest fees, no branches

Online banks charge no monthly account fee and often pay interest on checking accounts, which traditional banks rarely do. They have no physical locations, so they save money on rent and staff and pass those savings to you. Examples include Ally Bank, Charles Schwab Bank, and Discover Bank. You deposit checks by photographing the front and back with your phone, and the bank processes it within one to two business days. You reach customer service by email, live chat, or phone—usually available 24 hours a day.

The trade-off is that you cannot deposit cash directly. If you receive cash regularly and need to deposit it quickly, an online bank is inconvenient. You would have to find a partner bank or ATM that accepts cash deposits, and not all online banks have those partnerships. Before you open an account, check whether the bank offers a way to deposit cash at all.

Online banks work best if you get paid by direct deposit, pay most bills online or by card, and rarely need to deposit cash. If you do need cash deposits, some online banks partner with convenience stores or other banks' ATMs to let you deposit there.

Traditional banks: branches and cash deposits, but higher fees

A traditional bank has physical branches where you can deposit cash, withdraw money, and speak to a teller. You can also deposit checks at an ATM or through a mobile app. The downside is that most traditional banks charge a monthly maintenance fee—typically $10 to $15—unless you meet certain conditions. Those conditions usually include keeping a minimum balance (often $500 to $1,500), setting up direct deposit, or maintaining a certain number of debit card transactions per month.

If you cannot meet those conditions, the monthly fee will cost you $120 to $180 per year. That is real money. Before you open an account at a traditional bank, read the fee schedule and make sure you can actually avoid the monthly charge. Some banks waive the fee for students or people under 25, so ask about that if it applies to you.

Traditional banks also tend to charge higher fees for overdrafts (when you spend more than you have) and out-of-network ATM use. An overdraft fee can be $25 to $35 per transaction, and if you overdraft multiple times in one day, you can be charged multiple times. Some banks let you opt out of overdraft protection, which means a transaction will simply be declined instead of charging you a fee—this is worth doing if you tend to overspend.

Credit unions: member-owned and often cheaper

A credit union is owned by its members rather than shareholders, and it operates as a non-profit. This structure often means lower fees and better interest rates than traditional banks. Credit unions also tend to be more flexible about overdrafts and more willing to work with you if you have had banking problems in the past.

The catch is that credit unions have smaller networks. You can only use your credit union's ATMs and branches without paying a fee. If your credit union has only a few locations and you travel or move often, you will pay out-of-network fees regularly. Before you join, check whether the credit union has branches or ATMs near your home, work, and anywhere else you spend time. Many credit unions participate in shared branching networks, which means you can use other credit unions' branches for free, but not all do.

To open an account at a credit union, you usually have to become a member. Membership requirements vary—some credit unions are open to anyone in a certain geographic area, while others require you to work for a specific employer or belong to a specific organization. Search for credit unions in your area and check their membership rules before you apply.

What to check before you open an account

Monthly fees: Read the fee schedule and find out exactly what you have to do to avoid a monthly charge. If the bank requires a $1,000 minimum balance and you do not have that, the account will cost you money every month.

ATM network: Look up whether the bank has ATMs near places you go regularly. If you use ATMs often and the bank has few machines, you will pay $2 to $3 per out-of-network transaction. That adds up to $100+ per year if you use an ATM twice a week.

Overdraft fees: Check what the bank charges if you spend more than you have. Some banks charge $25 to $35 per overdraft. Ask whether you can opt out of overdraft protection so transactions are declined instead of charged.

Check deposits: If you receive checks, make sure the bank lets you deposit them by phone photo. Most do now, but confirm the timeline—some take three business days instead of one.

Customer service availability: If you think you might need help, check the hours customer service is available. Online banks usually offer 24/7 support, but traditional banks may have limited hours.

Interest rates: If you plan to keep money in savings, compare the interest rate each bank offers. Online banks typically pay more, but rates change frequently. Check the current rate before you open an account.

How to compare banks side by side

Make a list of the three to five banks you are considering. For each one, write down the monthly fee (or the condition to avoid it), the overdraft fee, the out-of-network ATM fee, and whether it has branches or ATMs near you. Also note the interest rate on savings and the customer service hours. This takes 15 minutes and makes the decision much clearer.

Many banks offer sign-up bonuses—$50 to $200 if you open an account and meet certain conditions like setting up direct deposit or making a certain number of transactions. These bonuses are real money, but do not let a bonus push you toward a bank that charges high fees otherwise. A $100 bonus does not make up for $15 per month in fees.

Once you have narrowed it down to one or two banks, open an account. Most banks let you open online in 10 to 15 minutes. You will need your Social Security number, a government ID, and proof of your current address (a utility bill, lease, or bank statement). After you open the account, your debit card usually arrives within 5 to 10 business days.

Frequently Asked Questions

Do I need to keep a minimum balance to avoid fees?

It depends on the bank. Online banks almost never require a minimum balance. Traditional banks often do—typically $500 to $1,500. Credit unions vary. Check the specific bank's fee schedule before you open an account. If you cannot meet the minimum, choose a bank that waives the fee for direct deposit or debit card use instead.

What happens if I overdraft my account?

If you spend more than you have, the bank will either decline the transaction or charge you an overdraft fee (usually $25 to $35) and let it go through. You can opt out of overdraft protection so transactions are declined instead. Either way, you owe the bank the money you spent plus any fees.

Can I use any ATM with my debit card?

You can use any ATM, but you will pay a fee if it is not your bank's ATM. Out-of-network fees are usually $2 to $3 per transaction. Some banks reimburse these fees if you use their ATM network, so check before you open an account.

How long does it take to open a bank account?

Most banks let you open an account online in 10 to 15 minutes. You need your Social Security number, a government ID, and proof of address. Your debit card arrives in 5 to 10 business days. You can usually start using the account immediately, even before the card arrives.

What if I have had banking problems before?

Credit unions are often more flexible with people who have had overdrafts or closed accounts in the past. Some traditional banks and online banks also work with people in this situation, but you may need to use a second-chance checking account, which has higher fees. Call the bank and ask whether they offer second-chance accounts before you apply.