The right bank depends on how you actually use money, not on which name you recognize
There is no single best bank. The choice depends on whether you need a branch you can walk into, how often you move money between accounts, whether you carry a balance on a credit card, what you pay in overdraft fees, and how much cash you handle. A bank that works for someone who gets paid by direct deposit and pays bills online may cost someone else hundreds of dollars a year.
Start by listing what you actually do with your account: Do you deposit checks by phone or in person? Do you withdraw cash multiple times a week? Do you need to send money to other people? Do you travel and need ATM access outside your city? Do you overdraft sometimes? Once you know your own habits, you can compare banks on the things that matter to you instead of the things that matter to someone else.
Key Takeaways
- Banks charge different amounts for overdrafts, minimum balances, and out-of-network ATM use, so the cheapest option for you depends on which fees you actually pay.
- Online-only banks typically have no monthly fees and higher savings rates, but require you to deposit checks by phone camera or mail them in.
- Banks with physical branches cost more but let you deposit cash and talk to someone in person when something goes wrong.
- Credit unions often charge lower fees than banks but may have fewer ATMs and stricter rules about who can join.
- You can open an account at multiple banks and use each one for what it does best — a checking account at one place, savings at another.
Online banks versus banks with branches
Online banks (also called direct banks) have no physical location. You deposit checks by taking a photo with your phone or mailing them in. You withdraw cash at any ATM, though you may pay a fee if it is not part of the bank's network. In return, they have no rent or teller payroll, so they charge no monthly fee and often pay higher interest on savings accounts. Examples include Ally, Charles Schwab Bank, and Discover Bank.
Banks with branches let you walk in, deposit cash, and talk to a person. They cost more — many charge a monthly maintenance fee unless you keep a minimum balance or set up direct deposit. But if you handle cash regularly, need to deposit checks in person, or want to speak to someone when a transaction goes wrong, a branch matters. Most large banks (Chase, Bank of America, Wells Fargo) and many smaller regional banks have branches.
A middle option is a bank with a few branches in your area but lower fees than the big chains. Search for "community banks near me" or "local banks [your city]" to find them. They often have better customer service and lower fees than national chains, though fewer ATMs.
What fees actually cost you
Banks make money from you in several ways. Compare these specific costs, not the bank's reputation:
| Fee Type | What It Is | How to Avoid It |
|---|---|---|
| Monthly maintenance | Charged just for having the account open | Set up direct deposit, keep a minimum balance (usually $500–$2,500), or use an online bank |
| Overdraft | Charged when you spend more than you have; typically $25–$35 per transaction | Link a savings account as backup, turn off overdraft protection, or use a bank that declines transactions instead of charging |
| Out-of-network ATM | Charged when you withdraw cash from an ATM that is not the bank's; typically $2–$3 per withdrawal | Use the bank's ATM network, use an online bank with fee reimbursement, or withdraw cash at grocery stores for free |
| Wire transfer | Charged to send money to another bank; typically $15–$30 | Use ACH transfer (free, takes 1–3 days) or peer transfer apps like Venmo |
| Returned check or ACH | Charged when a check or automatic payment bounces; typically $25–$35 | Keep enough balance to cover scheduled payments, or use a bank that warns you before a transaction bounces |
If you overdraft once a month, that is $300–$420 a year in fees alone. If you withdraw cash from out-of-network ATMs three times a week, that is $300–$450 a year. These costs matter more than whether the bank has a fancy app.
Credit unions as an alternative
A credit union is a member-owned nonprofit that works like a bank but typically charges lower fees and pays higher interest on savings. You can only join if you meet certain criteria — you work for a specific employer, live in a specific area, belong to a specific organization, or have a family member who is already a member.
Credit unions often have no monthly fee, lower overdraft charges, and more forgiving policies on minimum balances. The downside: fewer ATMs (though many credit unions are part of shared networks), fewer branches, and sometimes slower technology or customer service. If you may have access to for one and your employer or area has a credit union, it is worth comparing to banks.
To find credit unions you can join, search the CO-OP Network or Allpoint network websites, or ask your employer whether they sponsor one.
How to compare before you open
Before opening an account, write down your actual money habits for one month: How many times do you withdraw cash? Do you deposit checks? Do you overdraft? Do you travel? Then visit each bank's website and look up the fee schedule (usually under "Pricing" or "Fees"). Call or chat with customer service and ask these specific questions:
- What is the monthly maintenance fee, and what waives it?
- What is the overdraft fee, and can I turn off overdraft protection so transactions are declined instead?
- How many ATMs does the bank have, and do I pay a fee to use them?
- If I use an out-of-network ATM, what is the fee?
- Does the bank reimburse out-of-network ATM fees?
- How do I deposit checks — in person, by phone, or by mail?
- What is the interest rate on savings accounts right now?
Write down the answers. Then calculate which bank would cost you the least based on your actual habits. A bank with a $12 monthly fee but no overdraft charges may be cheaper than a free bank if you overdraft twice a month.
Opening multiple accounts at different banks
You do not have to choose one bank and stay there forever. Many people use one bank for checking (because it has branches or good overdraft protection) and another for savings (because it pays higher interest). Some use a third bank for a separate savings goal, like an emergency fund.
Opening multiple accounts takes a few minutes each and does not hurt your credit score. It can actually protect you: if one bank has a system outage or freezes your account by mistake, you still have access to money elsewhere. Just keep track of which account is where, and do not open so many that you lose track of your balances.
What happens after you choose
Once you pick a bank, you can open an account online (takes 10–15 minutes) or in person at a branch. You will need a government ID, your Social Security number, and an initial deposit (usually $25–$100, though some banks waive this). The bank will run a background check through ChexSystems, a database that tracks banking history. This does not affect your credit score.
After you open the account, you will get a debit card in the mail (usually within 5–10 business days) and online access immediately. Set up direct deposit with your employer if you have one, and move your regular bills and transfers to the new account. You can keep your old account open for a few weeks while you make sure everything works, then close it.
Frequently Asked Questions
Does opening a bank account hurt my credit score?
No. Banks check ChexSystems, not your credit report. Opening an account does not show up on your credit score and does not affect your ability to borrow money.
What if I have been denied a bank account before?
ChexSystems keeps a record of closed accounts and overdrafts. If you were denied, ask the bank why — it may be because of unpaid overdrafts at another bank. You can dispute errors on your ChexSystems report at chexsystems.com. Some banks (like Chime or LendingClub) specialize in second-chance checking and may accept you even if you have ChexSystems history.
Can I switch banks without losing my money?
Yes. Your money stays in your old account until you move it. You can transfer it electronically (takes 1–3 days), withdraw it in cash, or write yourself a check. Update your direct deposit and automatic bills with the new account information before you close the old one.
Should I keep money in savings at the same bank as my checking?
Not necessarily. Savings accounts at online banks pay much higher interest (currently 4–5% at some banks, compared to 0.01% at many big banks). You can keep checking at a local bank and savings at an online bank. Transfers between them take 1–3 days, which is actually useful — it makes you less likely to spend your emergency fund on impulse.
What if I do not have a government ID?
Most banks require one. If you do not have a driver's license or passport, you may be able to use a state ID card, tribal ID, or military ID. Call the bank first to ask what they accept. Some banks have workarounds for people without ID, but they are rare.