The three main places to bank, and what each one offers

You have three real choices: a traditional bank with physical branches, a credit union, or an online-only bank. Each one works differently, costs different amounts, and gives you different ways to deposit cash or talk to someone when something goes wrong.

A traditional bank has branches where you can walk in, deposit checks or cash, and speak to a person. You pay for this convenience through monthly fees, minimum balance requirements, or both. The largest banks—Chase, Bank of America, Wells Fargo, Citibank—have thousands of branches and ATMs nationwide, which matters if you travel or move often.

A credit union is owned by its members rather than shareholders, and typically charges lower fees and pays higher interest on savings. You must meet membership requirements—often tied to your employer, school, or geographic area—to join. Credit unions have fewer branches and ATMs than big banks, but they often share ATM networks with other credit unions, which expands your access.

An online-only bank has no physical locations. You deposit checks by photographing them with your phone, and you manage everything through an app or website. Online banks usually charge no monthly fees and pay higher interest rates on savings accounts because they have lower overhead costs. The tradeoff: you cannot walk in with cash or speak to someone face-to-face, though most offer phone or chat support.

Key Takeaways

  • Traditional banks charge monthly fees but give you branches and ATMs to use in person, which matters if you deposit cash regularly or need to speak to someone immediately.
  • Credit unions typically charge lower fees and pay higher interest, but you must meet membership requirements and have fewer branch locations than large banks.
  • Online banks charge no monthly fees and pay the highest interest rates, but you cannot deposit cash in person and must handle everything digitally.
  • Your choice depends on whether you need to deposit cash, how often you travel, whether you value in-person service, and how much you care about interest rates on savings.
  • You can open accounts at multiple banks and credit unions at the same time—there is no penalty for doing so.

When a traditional bank makes sense

Choose a traditional bank if you deposit cash regularly, need to speak to someone in person, or want the security of a large, well-known institution. If your employer pays you in cash, you receive cash tips, or you collect rent or payments in cash, a bank branch is the fastest way to deposit it. Online banks and most credit unions cannot accept cash deposits.

Large national banks also matter if you travel frequently or move between states. Chase has over 4,600 branches and 15,000 ATMs in the United States. Bank of America has roughly 4,300 branches. If you live in one state but work in another, or if you travel for work, a bank with nationwide reach means you can access your money anywhere without paying out-of-network ATM fees.

The cost is real: most national banks charge $10 to $15 per month for a basic checking account, though you can waive the fee by maintaining a minimum balance (often $500 to $1,500) or setting up direct deposit. Some regional banks charge less or nothing. Ask about the specific fees before you open an account.

When a credit union is the better choice

A credit union works best if you meet the membership requirements and want lower fees and better interest rates. Credit unions typically charge $0 to $5 per month for checking accounts, and some charge nothing at all. They also pay higher interest on savings accounts—sometimes 10 to 20 times what a traditional bank offers, though rates vary widely by credit union and change monthly.

Check whether you already may have access to for membership. Many credit unions are open to people who work for a specific employer, live in a specific county or zip code, attend a specific school, or belong to a specific organization. If your employer offers credit union membership, ask your HR department. If you live in a city or county, search for a community credit union in your area. The Credit Union Locator tool on the CO-OP network website lets you search by location or employer.

The main limitation is branch access. A credit union might have one or two locations in your area, compared to dozens of bank branches. However, most credit unions participate in shared branching networks and ATM networks. CO-OP and Allpoint are the two largest networks—if your credit union belongs to one, you can use thousands of ATMs and branches nationwide without paying a fee. Ask your credit union which networks it uses before you join.

When an online bank is worth the tradeoff

An online bank makes sense if you rarely need cash, handle most money digitally, and want the highest interest rates on savings. Online banks like Ally, Marcus, Discover, and Charles Schwab pay 4% to 5% annual interest on savings accounts (rates change daily, so check current rates before opening). A traditional bank might pay 0.01% on the same account. Over a year, the difference on $5,000 is roughly $200 to $250 in interest you actually earn.

Online banks charge no monthly fees and no minimum balance requirements. You deposit checks by taking a photo with your phone—the bank's app reads the check and credits your account within one to three business days. You cannot deposit cash, but you can withdraw cash at any ATM that accepts your debit card, though out-of-network ATMs charge a fee (usually $2 to $3 per withdrawal).

Customer service is phone or chat only, not in person. If something goes wrong—a fraudulent charge, a missing deposit, a locked account—you cannot walk into a branch. Most online banks have good phone support and respond to chat messages within hours, but if you strongly prefer face-to-face help, this is not the right choice.

How to compare fees and features across banks

Before you open an account, compare three things: monthly maintenance fees, minimum balance requirements, and ATM access. A bank that charges $12 per month costs you $144 per year, which erases years of interest on a small savings account.

Ask about the specific conditions for waiving fees. Many banks waive the monthly fee if you maintain a minimum balance, set up direct deposit, or make a certain number of debit card purchases per month. Some waive fees only if you meet multiple conditions at once. Write down the exact requirement before you open the account—do not assume.

Check the ATM network. If you use out-of-network ATMs twice a month at $3 per withdrawal, you pay $72 per year in fees alone. A bank with a large ATM network or a credit union in a shared network saves you money. Some online banks reimburse out-of-network ATM fees, which effectively gives you access to any ATM in the country.

Opening multiple accounts at different banks

You can open accounts at multiple banks and credit unions at the same time. There is no penalty or limit. Many people keep a checking account at a traditional bank for cash deposits and bill payments, a savings account at an online bank for interest, and a credit union account as a backup.

This strategy works because each account is insured separately by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA). If you keep up to $250,000 in a checking account at one bank and up to $250,000 in a savings account at another bank, both are fully protected if the bank fails. You do not lose money by spreading accounts across institutions.

The downside is managing multiple logins and keeping track of which account holds which money. If you are organized and want to optimize for fees and interest rates, multiple accounts make sense. If you prefer simplicity, one account at one bank is fine.

What to bring and what to expect when you open an account

You will need a government-issued photo ID (driver's license, passport, or state ID card) and proof of address. Proof of address can be a recent utility bill, lease, mortgage statement, or government document with your name and current address. Some banks accept a bank statement or credit card statement instead.

You will also need your Social Security number. The bank uses this to run a background check and report the account to credit bureaus. The check does not affect your credit score.

For online banks, you upload photos of your ID and proof of address through the app. For traditional banks and credit unions, you bring the documents in person or upload them online, depending on the bank's process. The account usually opens immediately or within one business day. You receive a debit card in the mail within 7 to 10 business days.

Frequently Asked Questions

Can I open a bank account online if I do not have a physical address?

Most banks require proof of a current address. If you are homeless or living temporarily, some banks accept a shelter address, a PO box, or a friend's address where you receive mail. Call the bank directly and explain your situation—policies vary. Community banks and credit unions are sometimes more flexible than national banks.

What happens if I do not have a government ID?

You will need some form of government-issued photo ID. If you do not have a driver's license or passport, you can get a state ID card from your state's DMV. The process takes a few weeks. Some banks accept a passport card or tribal ID as well. Call ahead to confirm what the bank accepts.

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

It depends on the bank. Some charge a monthly fee unless you keep a set balance (often $500 to $1,500). Others waive the fee if you set up direct deposit instead. Online banks typically have no minimum balance requirement. Read the fee schedule before you open the account—do not guess.

Which bank is safest if it fails?

All banks and credit unions insured by the FDIC or NCUA are equally safe up to the insurance limit ($250,000 per account type per institution). A large national bank is not safer than a small regional bank or credit union. The insurance, not the bank's size, protects your money.

Can I switch banks later if I change my mind?

Yes. You can close an account at any time with no penalty. Moving your direct deposit and automatic payments to a new bank takes a few days. You do not have to stay with your first choice.