A big decision you’ll end up making (or have already made but second-guess yourself on) is picking the right bank. People will often brag or complain about their banks.  They may even consider switching banks for various reasons (or be like my brother who sticks with Wells Fargo because he likes their logo). Yet people are likely to stick with their current bank because of the perception that it will be too hard to switch, or too similar to their old bank. How does one know the best bank to choose?

There are 3 basic types of banks —Community, Large/Corporate, and Internet Based—each with their own advantages and disadvantages.

Community Banks. These are your smaller, local, cooperative, credit union, often non-profit banks. Community banks normally exist for more than just making a profit off of you; they typically have a “greater purpose or mission”. USAA exists to “to facilitate the financial security of its members, associates and their families through provision of a full range of highly competitive financial products and services.” Georgia’s Own, a credit union serving the greater Atlanta region, states that they “Stand for the prosperity of their members”. Typically, they will only have a couple of branches, if not just one. You’re more likely to get better customer service here and for the employees to know you by name. You’re also more likely to get a higher interest rate on your savings accounts and CDs at your local community bank.

On the flip side, good luck finding your bank when you travel or if you move to a new city. While some community banks will refund you any ATM fees used out of network, there is just something about knowing that no matter where you are, you’ll be close to a branch of your bank, which is a benefit of the bigger banks. However, most of us don’t travel all the often and even when we do, rarely need to go into a branch to speak with someone. The smaller type community banks might not offer all of the services you’re looking for and often lack a robust online banking service.

Moving on, larger, corporate style banks are like your Bank of America, Wells Fargo, PNC-type banks. You’d be hard-pressed to be somewhere where there wasn’t a branch nearby (although I was in Oklahoma needing an ATM once and couldn’t find a Wells Fargo!). Although they’ll swear otherwise, you’re not going to be their number one or favorite customer, and the service won’t be as good as at a community bank. Also, interest rates will often be lower at bigger banks. My savings account at my big bank yields something pathetic like 0.1% while my credit union pays 0.2%. However, all the services you could ever want or need, they’ll be able to provide. I do love the new apps that allow me to deposit a check by using my phone. There is also a certain level of credibility in holding an account at a bigger bank. However, don’t assume that just because they are bigger they won’t fail; all of us should remember the financial crisis from a few years back…

Finally, there is a new breed of banks that I’m calling Internet-based banks. Similar in their services to traditional brick and mortar banks, except that there are no physical locations. Anywhere. I know that Ally, Fidelity, Charles Schwab, and Capital One are all now offering banking services. In today’s age, for us young professionals, it’s honestly not that far-fetched to bank entirely online. I mean with deposits through your phone, who really needs to go to the bank that much? And because they don’t have to pay for actual buildings or hire that many people, online banks’ interest rates are higher. My friend who banks with Ally swears he’s getting 0.9% interest. Identify theft and computer viruses are issues with internet-based banks though, one rouge virus and the whole bank shuts down. Let’s hope their customer service is good because if you have a problem, there’s no chance you’ll ever be able to sit down face to face with someone.

It’s important to note that all banks though, whether big or small, will guarantee your savings through either the FDIC (Federal Deposit Insurance Corp) or the NCUA (National Credit Union Association). Your money is guaranteed to amounts of at least $250k. That means that even if your bank goes under, you won’t lose your savings. If you’re not sure, just check online. The bank should state whether or not their deposits are insured. If not, don’t even think about banking with them.

At the end of the day, each option comes with trade-offs. Would you prefer the convenience of always having a bank nearby when you travel? Do you prefer the idea of supporting a smaller business where they know your name? Would you rather never go to a bank again or deal with lines or people? Carefully weigh the pros and cons and decide what you value most, and then you’ll be able to find the bank that’s right for you!

 Hope you enjoyed this article! If you did, please consider sharing it on Facebook/Twitter! You’re awesome! -Ben