Start with the fees you'll actually pay

The first thing to check is whether the account charges a monthly maintenance fee — and if it does, whether you can waive it. Some banks waive the fee if you keep a minimum balance (often $500 to $2,500), set up direct deposit, or maintain a linked savings account. Others charge the fee no matter what. A $10 monthly fee costs you $120 a year, which adds up fast if you're living paycheck to paycheck.

Beyond the monthly fee, look at what happens when you overdraw your account. An overdraft fee typically runs $25 to $35 per transaction, and some banks charge it multiple times per day if several transactions post at once. Ask whether the bank offers overdraft protection — a link to a savings account or credit line that covers the shortfall instead of triggering a fee. Some banks let you opt out of overdraft fees entirely, which means transactions will simply be declined rather than charged.

Check the cost of common services: ATM withdrawals outside the bank's network, wire transfers, cashier's checks, and account closure. If you travel or live far from a branch, ATM fees matter. Some banks reimburse out-of-network fees; others charge $2 to $3 per withdrawal.

Key Takeaways

  • Monthly maintenance fees, overdraft fees, and out-of-network ATM charges are the three costs most likely to drain your account over time.
  • Check whether the bank has branches and ATMs near your home or workplace, because convenience affects how often you'll pay fees.
  • Online banks typically have no monthly fees and no minimum balance, but you cannot deposit cash or speak to someone in person.
  • Interest rates on savings accounts vary widely — from nearly zero at large banks to 4% or higher at online banks — so compare before you deposit.
  • Read the fine print on how the bank calculates your balance and when deposits clear, because this affects whether you'll overdraw accidentally.

Know where you can actually access your money

If you need to deposit cash regularly, you need a bank with physical branches or a network of ATMs where you can do it. Large national banks like Chase, Bank of America, and Wells Fargo have thousands of branches, but they also charge higher fees and pay almost no interest on savings. Credit unions often have fewer locations but lower fees and better rates; you can find ATM networks they belong to on their website.

Online banks like Ally, Marcus, and Discover have no physical branches at all. You deposit checks by photographing them with your phone and withdraw cash only at ATMs. If you never carry cash and get paid by direct deposit, this works fine. If you need to deposit cash weekly or speak to someone face-to-face, an online bank will frustrate you.

Check the bank's ATM network before you open the account. Some banks belong to shared networks (Allpoint, MoneyPass, CO-OP) that let you use thousands of ATMs nationwide for free. Others charge you $2 to $3 per out-of-network withdrawal. If you live in a rural area, call ahead and ask whether the bank has an ATM near you.

Compare interest rates on savings, even if they're small

The interest rate a bank pays on savings accounts has ranged from nearly 0% at large banks to 4% or higher at online banks in recent years. The rate varies depending on the Federal Reserve's decisions and the bank's own strategy. A $5,000 savings account earning 0.01% per year makes you 50 cents; the same account at 4% makes you $200. Over time, this difference matters.

When you compare rates, look at the Annual Percentage Yield (APY), not just the interest rate. The APY includes how often the bank compounds interest (daily, monthly, or quarterly), so it shows you the real return. Rates change frequently, so check the bank's website the day you plan to open the account, not weeks earlier.

Large banks typically pay 0.01% to 0.05% on savings. Credit unions and online banks often pay 4% to 5% on high-yield savings accounts, though some require a minimum balance or limit how many withdrawals you can make per month. If you're saving money rather than just storing it, the difference between 0.01% and 4% is real.

Understand how the bank handles deposits and holds

When you deposit a check, the bank does not make the money available immediately. Federal law allows banks to hold checks for up to five business days, though many hold them longer. During this time, the money is not in your account, so if you spend it before the hold clears, you'll overdraw.

Ask the bank's policy on check holds before you open the account. Some banks clear local checks in one business day and out-of-state checks in three. Others hold everything for five days. If you live paycheck to paycheck, a five-day hold can mean the difference between paying a bill on time and overdrawing.

Mobile check deposits (photographing a check with your phone) sometimes clear faster than in-person deposits, but not always. Ask whether the bank offers mobile deposit and how long it holds those checks. Also ask what happens if you deposit a check and then withdraw the money before the hold clears — some banks will charge you an overdraft fee even though the check eventually cleared.

Check the minimum balance requirement and what it costs

Many banks require you to keep a minimum balance in the account to avoid the monthly fee. Common minimums are $500, $1,000, or $2,500. If your balance drops below the minimum, you pay the fee — usually $10 to $15 per month. Over a year, this adds up to $120 to $180.

Some banks calculate the minimum based on your lowest balance during the month; others use your average balance. If you get paid once a month and spend most of it before the next paycheck, your lowest balance might be very low even though you deposit thousands. Ask how the bank calculates it.

Online banks and many credit unions have no minimum balance at all. If you cannot reliably keep $500 or $1,000 in the account, choose a bank without this requirement. The fee will cost you more than any interest you earn.

Look at how the bank handles overdrafts and declined transactions

When you spend more than you have, the bank can either charge you an overdraft fee (and cover the transaction) or decline the transaction (and charge nothing). Ask which the bank does by default, because this affects your finances directly.

Some banks charge overdraft fees on debit card purchases but not on checks or ACH transfers. Others charge on everything. A single mistake — forgetting about a subscription, a delayed paycheck, or a miscalculation — can trigger multiple overdraft fees in one day. Ask whether the bank caps the number of overdraft fees per day and whether you can turn off overdraft protection for debit cards.

If you opt out of overdraft coverage, your debit card will be declined when you don't have enough money, which is inconvenient but costs you nothing. If you keep overdraft on, you'll pay $25 to $35 per transaction that overdraws. For most people living on a tight budget, opting out is safer.

Verify the bank's security and fraud protection

All banks insured by the Federal Deposit Insurance Corporation (FDIC) protect your deposits up to $250,000 per account type per bank. This means if the bank fails, you get your money back. Check that the bank displays the FDIC logo on its website or ask directly whether it is FDIC-insured. If it is not, your deposits are not protected.

Ask about fraud protection on debit cards and online transfers. Federal law limits your liability to $50 if you report unauthorized charges within two business days, and $500 if you report within 60 days. After 60 days, you may have no protection. The bank's own policy may be better, so ask.

Check whether the bank offers two-factor authentication (a code sent to your phone when you log in) and whether it monitors for suspicious activity. These features do not prevent fraud, but they make it harder and give you faster notice when something goes wrong.

Frequently Asked Questions

Do I need to keep a certain amount of money in the account at all times?

Many banks require a minimum balance to avoid monthly fees, typically $500 to $2,500. If your balance drops below it, you pay the fee. Online banks and credit unions often have no minimum. Check the bank's policy before you open the account, and choose one that matches your ability to keep money on hand.

What's the difference between a checking account and a savings account?

A checking account is for money you spend regularly — it comes with a debit card and checks. A savings account is for money you want to keep and earn interest on. Most banks let you open both at the same time. Savings accounts pay higher interest but limit how many withdrawals you can make per month.

Can I switch banks after I open an account?

Yes. You can close the account anytime, though some banks charge a fee if you close within a certain period (usually 90 days to a year). Before you switch, set up direct deposit at the new bank and update any automatic payments. The old bank will close the account once the balance is zero.

What happens if I don't use the account for a long time?

If you do not make any deposits or withdrawals for a year or more, the bank may close the account or mark it as inactive. Some banks charge a monthly fee on inactive accounts. If you plan to leave money sitting, ask the bank's policy on inactive accounts before you open it.

Should I open an account online or in person?

Online applications are faster and often come with better rates and lower fees. In-person applications let you ask questions and get help on the spot. Either way, you'll need a government ID, proof of address, and your Social Security number. Choose based on whether you prefer convenience or face-to-face service.