How to Choose the Right Bank For You

With a recent onslaught of banking mega-mergers and the continued expansion of a new breed of financial institutions, deciding where and how to bank has become increasingly difficult.

According to SNL Financial, a financial research firm, there were more than 4,800 bank mergers from 1990 through 2003. The Federal Deposit Insurance Corporation reports there are currently 10,271 FDIC-insured institutions in the United States. So how do you know which one is right for you?

Pick a Flavor

When considering which type of bank is best for you, you should first consider your needs as a customer. There are three primary categories of banks — big national banks, regional banks and Internet banks — each offering a variety of services at different cost points.

Big national banks, such as Citibank, Fleet, Wells Fargo and Bank One (in the midst of an acquisition by JP Morgan Chase), have ATMs and branches across the country, which is particularly useful if you travel frequently. They also provide the ease of one-stop-shopping for all your financial service needs — through a big bank, you can often invest in mutual funds, buy insurance, get a credit card, get a mortgage, take out student loans, and more. In addition, big banks tend to be the leaders when it comes to introducing innovative technologies, and if you happen to be wealthy, they offer an array of specialized services along with a personal banking representative to assist you.

One of the biggest assets of big national banks is their online accessibility and offerings. For example, Bank of America and Citibank now offer their customers free online bill paying services, while others, like Charles Schwab, charge a small monthly fee of $6.95.

Online bill payment is an excellent way to keep track of your finances and an efficient way to balance your checkbook.

While regional banks may lack a national presence, they are often more flexible and offer greater incentives for smaller accountholders. Specifically, compared to their larger competitors, regional banks typically offer a more personal level of service and have lower fees. In addition, regional banks are able to avoid the bureaucratic machinery of larger banks, making it easier to adapt to the needs of their community.

Unlike their brick and mortar counterparts, Internet banks offer ease without high fees. For example, according to a survey on bankrate.com, to avoid fees, the average minimum balance on an interest-earning checking account at an Internet bank is $1,088 while the average at a traditional bank is closer to $2,627. In addition, Internet banks seldom charge their customers a fee for using another bank's ATMs.

No Fees Please

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