Choosing the Best Banks and Credit Unions

How to Pick the Right Financial Institution

Selecting the right bank or credit union to entrust with your finances takes research. Each provides unique pros and cons in terms of accounts, fees, rates, locations, technology and customer service. Smart consumers shop around to find the optimal financial institution matching their needs.

This comprehensive guide examines the key factors to consider when choosing between banks and credit unions. It provides best practices for evaluating options and avoiding pitfalls to confidently select the best providers for your situation.

Banks vs Credit Unions: Key Differences

While both offer similar deposit accounts and loans, some distinct differences exist between banks and credit unions:

Ownership

Banks are for-profit, publicly traded companies beholden to shareholders.
Credit unions are nonprofit cooperatives owned by members.

Fees

Banks rely heavily on fee income like overdraft fees.
Credit unions focus on keeping fees low for members.

Rates

Bank rates on deposits tend to be lower.
Credit unions pay higher interest on savings and charge less on loans.

Accessibility

Banks have ATMs and branches everywhere for convenient access.
Credit union locations are more limited depending on membership eligibility.

Products

Banks provide a full suite of accounts, loans, and investment products.
Credit unions offer the basics but fewer advanced services like wealth management.

Technology

Large banks offer robust digital apps and extensive features.
Smaller credit unions can lack leading-edge tech capabilities.

Customer Service

Banks struggle providing personalized service at scale.
Credit unions foster close member relationships and attentiveness.

Review these tradeoffs as you evaluate options for your primary financial institution.

Features to Look for in Banks and Credit Unions

Here are desirable traits to seek out when selecting banks and credit unions:

Account Offerings

Free checking with no monthly fees, minimums or balance requirements
Savings accounts with competitive interest rates
Certificates of deposit with flexible terms
Robust online banking and mobile app
Access to branches and widespread ATM networks
Availability of overdraft protection

Lending Products

Credit cards with attractive rewards, rates, and fees
Installment loans and lines of credit with reasonable rates
Mortgage offerings with competitive rates and terms
Auto loan financing discounted for pre-approval
Personal loans for debt consolidation and major expenses

Technology Capabilities

Digital account opening, loan applications, and money transfers
Photo check deposit and instant person-to-person payments
Budgeting tools and financial dashboards
Biometric login like fingerprint or facial recognition
Virtual assistants for managing accounts via chat
Alerts and notifications to monitor activity and balances

Customer Service

Extended hours live support for assistance
Local branches for convenient in-person interactions
Phone and chat support options without excessive holds
Responsive engagement on social media channels
Free seminars on financial topics
Designated advisors for relationship management

The best banks and credit unions go above and beyond with great rates, robust digital capabilities, and top-notch personalized service.

Factors to Consider When Choosing Banks and Credit Unions

Take the following factors into account as you evaluate banking and credit union providers:

Location and Accessibility

For physical branches, assess proximity to home and work as well as locations relative to where you travel and run errands. Remote-only banks still allow ATM access for cash needs.

Account Fees

Compare monthly maintenance fees, overdraft policies, minimum balance requirements and other cost factors across checking and savings accounts. Avoid unnecessary fees.

Interest Rates

Compare interest rates paid on savings accounts, CDs, and other deposit products. Seek out top payouts by asset category.

Technology Platforms

Review digital banking accessibility and features across website and mobile apps. Assess user experience and functionality.

Lending Rates

Shop mortgage rates, credit cards APRs, auto loan financing offers, and other lending rates. Determine if you can qualify for discounted pricing.

Customer Service Reputation

Research online reviews and complaint records to gauge overall satisfaction across branches, phone support, online chat, social media, and other servicing channels.

Credit Union Eligibility

Determine if you or family members qualify for credit union membership through employer, association, geographic, or other criteria.

Security Protections

Evaluate availability of fraud monitoring, purchase protections, verified through security layers like biometrics and double authentication.

Finding the optimal fit depends on which features align closest with your banking priorities and needs.

Warning Signs of Banks and Credit Unions to Avoid

Steer clear of financial institutions exhibiting these red flags:

Numerous complaints about poor customer service across reviews and platforms
High volume of account fees for basic services like overdrafts or maintenance
Opaque fee disclosures and disclaimer footnotes that disguise true costs
Teaser rates that spike dramatically after short introductory periods
Excessive requirements to waive fees like high minimum balances
Limited digital capabilities and reliance on legacy physical branches
Missing conveniences like no fee ATM access and direct deposit
Uncompetitive rates for deposits and loans across the product spectrum
Minimal mobile functionality and lack of conveniences like mobile check deposit
Slow response times and long hold times when needing support
Security breaches, privacy violations, and incidents putting customers at risk

While not every deficiency requires switching institutions, repeated major shortcomings across customer experiences, value, and service merit consideration. Don’t settle for mediocrity.

Questions to Ask When Interviewing Banks and Credit Unions

When interacting with financial institutions, ask targeted questions to determine fit:

What types of accounts and associated fees should I expect based on my account activity and balance?
How competitive are your rates for savings accounts, CDs, installment loans, and mortgages?
Do you offer discounted pricing or added perks for bundled households, direct deposit, or total asset balances?
How does your mobile app and online experience compare to top competitors?
How quickly are issues like fraud claims and deposit or transfer errors resolved?
How easy is it to reach customer service after hours for urgent needs?
How are branches staffed to minimize wait times for in-person assistance?
What additional support resources are available like financial advisors or retirement planners?
How often have technology systems like mobile app or ATMs experienced outages orinterruptions?

Get clear direct answers to identify top providers truly meeting customer needs versus those paying lip service.

Best Banks: Top National and Regional Options

These banks consistently rate well across factors like fees, rates, features, and service:

Chase – Among the largest U.S. banks with extensive branches and robust online offerings. Strong for one-stop banking and credit cards.

Bank of America – Leading national bank with comprehensive financial products and digital capabilities. ATM access is unmatched.

Citi – Top marks for digital banking experience, credit card rewards, and nationwide presence. Good for urban residents.

Wells Fargo – Established history and diverse offerings, although scandal-plagued reputation. Competitive mortgage and deposit rates.

U.S. Bank – Regional powerhouse on the West Coast and Midwest catering well to mass affluent clientele. Solid interest rates across accounts.

PNC – East coast institution growing nationwide. Standout mobile app, deposit rates, and customer satisfaction ratings.

Truliant – Top performing southern bank with excellent deposit rates and robust online platform. Strong loan rates for prime borrowers.

Research regional banks where you live or work as they often provide superior service and pricing compared to national players.

Best Credit Unions: Top Member-Owned Options

These highly rated credit unions stand out for great rates, low fees, and excellent service:

Alliant – Leading online credit union with industry topping interest rates and robust digital tools.

PenFed – Offers top-tier deposit rates and loan pricing along with solid online and branch access.

BECU – Digital-first Washington based credit union with loyal member base and competitive pricing.

America First – Utah credit union with national availability and excellent car financing rates.

Service – Top New England credit union with members nationwide. Strong deposit rates.

State Employees’ – Raleigh, NC based credit union with loyal state employee membership and great rates.

Patelco – Bay Area credit union with 60+ years of history and affordable loan options.

For credit union access, check employers, associations, geographic eligibility and family members for potential membership avenues.

Choosing the Best Accounts for Your Needs

Match accounts specifically to your financial profile and activities:

Savers – Seek the highest savings, money market and CD rates to grow deposits. Credit unions and online banks excel here.

Homebuyers – Find banks or credit unions offering discounted mortgage rates, lender credits, and low down payments for relationship clients.

Debt Consolidators – Banks with prime personal loan rates help efficiently roll up credit card balances under one affordable fixed monthly loan payment.

Students – Opt for college student checking accounts with no monthly fees, minimums, and attractive linked savings rates.

Young Adults – Digital banking conveniences like instant payments and budgeting tools cater well to millennials just getting started financially.

Frequent Travelers – National banks with extensive free ATM networks and credit cards with travel point bonuses add value for jetsetters.

Small Businesses – Established community banks provide personalized service and loans to local small business owners.

High Net Worth – Wealth management divisions of major banks and investment houses cater specifically to affluent clients.

Find the banks and credit unions aligning services, pricing, and offers to your unique financial profile.

Should You Change Banks or Credit Unions?

If your current primary financial institution exhibits issues like:

Repeated customer service frustration and lack of issue resolution
Opaque fee disclosures or charges eating into account balances
Deposit rates and loan rates no longer competitive
Lagging digital capabilities and lack of conveniences you desire
Repeated IT issues that restrict accessibility to your accounts
Policy changes reducing benefits of banking relationship

It may prove worthwhile to explore alternatives that better align with your needs and preferences. Even inertia of an existing relationship does not preclude seeking out better value and service that new providers offer.

Key Takeaways on Selecting Financial Institutions

Compare bank and credit union options on rates, fees, technology, service models and accessibility.
Interview customer service reps to determine responsiveness to member needs.
Read online reviews and research complaint ratios.
Meet eligibility requirements for credit union membership.
Match primary accounts specifically to your financial profile and activity.
Don’t overlook smaller regional and community providers.
Consider switching for better rates, technology and service if current bank consistently underperforms.

The right fit depends on aligning features, pricing and service with your unique financial situation. Do your homework to find banking relationships offering true value over the long haul.