There is no single best bank for everyone

The bank that works best depends on how you use money—whether you need to visit a branch in person, how often you withdraw cash, what you're willing to pay in fees, and whether you want to borrow money later. A bank that's perfect for someone who uses ATMs and pays bills online might be wrong for someone who deposits checks weekly and needs to talk to a person. Start by listing what you actually do with your account, then match it to a bank's real strengths.

This guide walks you through the main types of banks, what each charges, and how to spot the differences that matter to your situation. You'll also find a way to compare specific banks side by side before you open anything.

Key Takeaways

  • Large national banks offer many branches and ATMs but often charge monthly fees unless you keep a minimum balance or set up direct deposit.
  • Online-only banks typically have no monthly fees and higher savings rates, but you cannot deposit cash or speak to someone in person.
  • Credit unions may offer lower fees and better loan rates if you meet their membership rules, but they have fewer ATMs and branches than national banks.
  • The cheapest account for you depends on whether you need branches, how much you keep in savings, and whether you'll borrow money.
  • You can open accounts at multiple banks to use each one's strengths—a checking account at one place and savings at another.

National banks: branches everywhere, but fees if your balance is low

Large national banks like Chase, Bank of America, Wells Fargo, and Citibank have thousands of branches and ATMs across the country. If you need to deposit cash, get a cashier's check, or talk to someone face-to-face, a national bank is the easiest choice. You can walk into almost any branch and handle your account, even if you opened it somewhere else.

The trade-off is cost. Most national banks charge a monthly maintenance fee—typically $10 to $15—unless you meet one of their conditions. Common ways to avoid the fee: keep a minimum balance (often $1,500 to $2,500), set up direct deposit of your paycheck, or maintain a certain number of debit card transactions per month. If you cannot meet these conditions, you'll pay the fee every month, which adds up to $120 to $180 a year.

National banks also tend to pay very little interest on savings accounts—sometimes less than 0.01% per year. If you're saving money, that interest is nearly worthless. However, if you need to borrow money later, national banks make it easier to get a personal loan or credit card because they already know your account history.

Online-only banks: no monthly fees, but no physical location

Banks like Ally, Marcus, Discover, and Charles Schwab operate only online. You cannot walk into a branch or deposit cash at a teller window. Everything happens through a website or mobile app—you transfer money, pay bills, and deposit checks by taking a photo with your phone.

The advantage is cost. Online banks have no monthly maintenance fees, no minimum balance requirements, and they pay much higher interest on savings accounts—often 4% to 5% per year, compared to less than 0.1% at a national bank. If you're saving money, the difference is real: $1,000 in an online savings account earns $40 to $50 per year, versus almost nothing at a national bank.

The disadvantage is access. You cannot deposit cash unless the bank has a partnership with a retail location (some do, some don't—check before you open the account). You cannot speak to a person on the phone at most online banks, though many offer email or chat support. If you need to handle something unusual or urgent, you may have to wait hours or days for a response.

Online banks work best if you get paid by direct deposit, pay most bills electronically, and rarely need cash. They are also a good choice for a savings account even if your checking account is elsewhere.

Credit unions: lower fees and better loan rates, if you can join

Credit unions are member-owned financial institutions, not corporations. They typically charge lower fees than national banks and pay better interest rates on savings. Some credit unions have no monthly maintenance fee at all, and their loan rates are often 1% to 2% lower than a national bank would offer.

The catch is membership. You can only join a credit union if you meet their rules—you might need to work for a specific employer, live in a certain area, belong to a particular organization, or have a family member who is already a member. Not everyone can join every credit union. Search for credit unions you're may be able to access for at CO-OP.org or Shared Branch, which list membership rules for thousands of credit unions.

Credit unions also have fewer ATMs and branches than national banks. If you need cash frequently or travel often, you may pay out-of-network ATM fees ($2 to $3 per withdrawal) that eat into your savings. However, many credit unions belong to shared branching networks, so you can conduct basic transactions at other credit unions' locations.

How to compare banks on the things that actually matter

Before you open an account, write down your real banking habits. Do you deposit cash weekly, or almost never? Do you travel and need ATM access everywhere? Do you keep a large balance, or do you live paycheck to paycheck? Do you think you'll need a loan in the next few years?

Then check each bank's fee schedule for these specific costs: monthly maintenance fee and what it takes to waive it, out-of-network ATM fees, overdraft fees, and fees for closing an account early. Look at the interest rate on savings accounts—the difference between 0.01% and 4.5% is enormous if you're saving money. If you might borrow money, ask about personal loan rates and credit card APR (annual percentage rate).

Use a spreadsheet or a straightforward table to list three banks you're considering and their fees side by side. Calculate what you'd actually pay in a year based on your habits. If you keep $2,000 in savings and never overdraft, the $120 annual fee at a national bank might outweigh the convenience of a branch. If you deposit cash every week, an online bank won't work no matter how low the fees are.

You can use multiple banks at once

You don't have to choose one bank for everything. Many people keep a checking account at a national bank for its branches and ATMs, a savings account at an online bank for its high interest rate, and a credit card from a credit union for its low APR. This approach lets you use each bank's strength without paying for features you don't need.

Opening multiple accounts takes a few minutes each and does not hurt your credit score. The only downside is that you have to manage more accounts, which can get confusing if you're not organized. But if you use online banking and set up automatic transfers between accounts, it's manageable.

Red flags that mean a bank is not right for you

Avoid any bank that charges a monthly fee you cannot waive, if you cannot meet their conditions. If a bank requires a $5,000 minimum balance and you have $1,000, you'll pay the fee every month. Do the math before you open the account.

Be cautious of banks that charge high overdraft fees ($30 to $35 per overdraft) without offering overdraft protection—a service that automatically transfers money from savings to checking if you run short. Overdraft fees are one of the biggest ways banks drain money from people who are already struggling.

If you need to deposit cash regularly, do not open an account at an online bank unless it has a partnership with a retail location near you. Check the bank's website for the list of places you can deposit cash before you commit.

Frequently Asked Questions

Does opening a bank account hurt my credit score?

No. Banks do a soft credit check to verify your identity and check for fraud, but this does not lower your credit score. You can open multiple accounts without affecting your credit. Hard inquiries that lower your score only happen when you explore for credit—a loan or credit card.

What if I have a history of overdrafts or closed accounts?

Some banks check ChexSystems, a database of banking history, before opening an account. If you've had accounts closed for overdrafts or fraud, you might be denied. Online banks and credit unions are sometimes more lenient than national banks. You can request your ChexSystems report at chexsystems.com to see what's on file.

Is it better to keep all my money in one bank or split it across multiple banks?

Splitting accounts lets you use each bank's strengths—checking at a national bank for access, savings at an online bank for interest. The downside is managing multiple logins and transfers. If you prefer simplicity, one bank is fine. If you want to optimize fees and interest, multiple banks usually save you money.

What's the difference between a debit card and a credit card from a bank?

A debit card draws money directly from your checking account. A credit card borrows money from the bank, and you pay it back later with interest. Banks offer both, but credit cards are separate products with their own terms and fees. A checking account comes with a debit card automatically.

Can I switch banks after I open an account?

Yes. You can close an account anytime, though some banks charge a fee if you close within a certain period (usually 90 days to a year). Before you close, move your direct deposits and automatic payments to your new bank. Keep the old account open for a few weeks to catch any stragglers, then close it.