The best bank account is the one that matches how you actually use money

There is no single "best" bank account because the right choice depends on what you do with your money. Someone who gets paid weekly and needs cash when ready has different needs than someone who receives a monthly paycheck and rarely visits a branch. The account that works for you is the one that costs you the least in fees, gets you access to your money when you need it, and doesn't require you to jump through hoops to maintain it.

The real work is figuring out what matters most to you, then finding an account that delivers on those things. This guide walks you through the main types of accounts and what to look for in each one.

Key Takeaways

  • The best account for you depends on how often you withdraw cash, how you receive money, whether you need a physical branch nearby, and how much you can keep in the account without paying fees.
  • Checking accounts are for money you use regularly; savings accounts are for money you want to set aside and earn interest on.
  • Online banks typically charge no monthly fees and pay higher interest, but you cannot deposit cash or visit a branch in person.
  • Credit unions and community banks often have lower fees and more flexible rules than large national banks, but may have fewer ATMs and branches.
  • The monthly fee, ATM access, and minimum balance requirement are the three things that cost you the most money over time.

Checking accounts: for money you spend regularly

A checking account is where you keep money for everyday expenses. You deposit your paycheck, pay bills, use a debit card, and write checks if you need to. Most checking accounts come with a debit card and online access so you can check your balance and move money without visiting a branch.

The main cost of a checking account is the monthly maintenance fee. Some banks charge $10 to $15 per month just to have the account open. Others charge nothing if you meet certain conditions — like keeping a minimum balance, receiving direct deposit, or making a certain number of debit card purchases each month. Before you open an account, ask what the monthly fee is and what you have to do to avoid it. If the bank's requirement is something you will not do anyway, that fee will cost you $120 to $180 per year.

The second cost is ATM fees. If you need cash and use an ATM that is not owned by your bank, you may pay $2 to $3 per withdrawal. If you withdraw cash twice a week, that adds up to $200 per year. Ask whether the bank has ATMs near your home and work, or whether it reimburses out-of-network ATM fees.

Savings accounts: for money you want to keep separate and grow

A savings account is separate from your checking account and is meant for money you are not spending right now. The main reason to use one is that savings accounts pay interest — the bank pays you a small percentage of the money you keep there. The interest rate varies widely depending on the bank and changes over time, so it is worth comparing before you open an account.

Some savings accounts have a monthly fee if your balance drops below a certain amount, often $100 to $500. Others have no monthly fee at all. Online banks almost always pay higher interest and charge no monthly fee, but you cannot deposit cash in person — you have to transfer money from another account or mail in a check.

Banks are also required to limit how many times per month you can withdraw money from a savings account. This limit used to be six withdrawals, but the rules have loosened. Ask your bank what the current limit is before you open the account, because exceeding it can result in a fee or the account being closed.

Online banks versus brick-and-mortar banks

An online bank exists only on the internet — it has no physical branches. Because it does not pay for buildings and staff, it can charge lower fees and pay higher interest rates. Most online banks charge no monthly fee for checking or savings accounts, and they pay interest rates that are two to three times higher than what a traditional bank offers.

The tradeoff is that you cannot walk into a branch, and you cannot deposit cash directly into your account. If you need to deposit cash, you have to transfer it from another bank account or use a partner bank's ATM. This works fine if you get paid by direct deposit and rarely use cash. It does not work if you are paid in cash or need to deposit checks frequently.

A brick-and-mortar bank has physical locations where you can visit, deposit cash, and talk to someone in person. You pay for this convenience with higher fees and lower interest rates. Large national banks like Bank of America and Wells Fargo typically charge $10 to $15 per month for checking accounts and pay almost no interest on savings. Community banks and credit unions often charge lower fees and are more willing to work with you if you have an unusual situation.

Credit unions and community banks

A credit union is a bank owned by its members rather than by shareholders. Because the goal is to serve members rather than make a profit, credit unions typically charge lower fees and pay higher interest than large national banks. Many credit unions have no monthly fee for checking accounts, and some reimburse ATM fees if you use an out-of-network machine.

The main limitation is that credit unions have fewer ATMs and branches than national banks. If you live in a rural area or travel frequently, you may not have convenient access to a credit union ATM. Credit unions also have membership requirements — you might have to live in a certain area, work for a certain employer, or be related to an existing member. Some credit unions have opened their membership to anyone, but you should ask before you assume you can join.

Community banks are smaller than national banks but larger than credit unions. They usually have lower fees than national banks and are more willing to work with people who are new to banking or have unusual financial situations. Like credit unions, they have fewer ATMs and branches than national chains, so location matters.

The three costs that add up fastest

When you are comparing accounts, focus on three numbers: the monthly maintenance fee, the ATM fee, and the minimum balance requirement.

The monthly maintenance fee is the easiest to calculate. If a bank charges $12 per month and you cannot avoid it, that is $144 per year. If another bank charges nothing, you save $144 just by switching. Many banks waive this fee if you meet a condition, so ask what the condition is and whether you will actually meet it.

The ATM fee depends on how often you withdraw cash. If you use your bank's ATM, there is usually no fee. If you use another bank's ATM, you may pay $2 to $3 per transaction. Some banks reimburse these fees automatically; others do not. If you withdraw cash twice a week from an out-of-network ATM and pay $2.50 each time, that is $260 per year. Choosing a bank with ATMs near your home and work can save you this money.

The minimum balance requirement is the amount of money you have to keep in the account to avoid a fee. If the requirement is $500 and you can easily keep that much, it does not cost you anything. But if the requirement is $2,500 and you struggle to keep that much in the account, you will pay a monthly fee whenever your balance dips below it. Over a year, this can cost more than the monthly maintenance fee itself.

Questions to ask before you open an account

Before you commit to a bank, ask these questions and get the answers in writing or take a screenshot:

  • What is the monthly maintenance fee, and what do I have to do to avoid it?
  • How many ATMs does this bank have near my home and work?
  • If I use an ATM that is not owned by this bank, do I pay a fee? If so, how much?
  • What is the minimum balance I have to keep in the account?
  • What is the interest rate on savings accounts, and can it change?
  • Can I deposit cash, and if so, how?
  • Can I access my account online and on a mobile phone?
  • If I have a problem, can I call someone or do I have to use chat?

Write down the answers for two or three banks you are considering, then compare them side by side. The bank with the lowest total cost — fees plus lost interest — is usually the best choice for you.

Frequently Asked Questions

Should I use a big national bank or a smaller bank?

Big national banks have more ATMs and branches, which is useful if you travel or move frequently. Smaller banks and credit unions usually charge lower fees and pay higher interest. If you stay in one place and rarely need a branch, a smaller bank usually saves you money. If you move often or need in-person service, a national bank may be worth the higher fees.

Can I have both a checking account and a savings account at the same bank?

Yes, and most people do. You use the checking account for everyday spending and the savings account to set money aside. You can transfer money between them online whenever you need to. Having both accounts at the same bank makes it easier to move money and usually does not cost extra.

What if I do not have much money to keep in the account?

Look for banks with no minimum balance requirement or a very low one, like $25. Online banks and credit unions often have no minimum. Avoid banks that require you to keep $500 or more, because the monthly fee you will pay when your balance drops below that will cost you more than you save.

Is it safe to use an online bank?

Online banks are insured by the same government agency (the FDIC) that insures traditional banks, so your money is protected up to $250,000. The main risk is not safety but convenience — if you need to deposit cash or talk to someone in person, an online bank cannot help you. Choose an online bank only if you are comfortable doing everything by phone, email, or app.

How do I know if a bank is trustworthy?

Check whether the bank is insured by the FDIC (for banks) or the NCUA (for credit unions). You can search for any bank on the FDIC website to confirm it is real and insured. Read recent customer reviews on independent sites, but remember that people are more likely to leave reviews when they are angry than when they are satisfied.