Bank and Credit Union Buying Guide

If you’re like many Americans, you have a checking account at one of the three largest banks in the country: Bank of America, Chase, and Wells Fargo. Collectively, these giant banks hold about 32% of all FDIC-insured banking assets in the United States and provide many benefits, such as multi-branch networks, state-of-the-art digital banking platforms, and sophisticated security systems.

Key Bank Products and Services

How can you get the best service and the lowest rates? Follow this combination plan for maximum savings:

Checking Account A checking

the account is the engine of a household’s finances. Financial institutions of all sizes (from the largest banks to small community banks to national and local credit unions) typically offer the most (if not all) of the critical services and technologies you need. These include online and mobile banking, direct paycheck deposit, debit card access to your money through bank-owned or fee-free ATM networks throughout the country, online bill payment, remote check deposit using your smartphone, fast digital money, online and mobile person-to-person (P2P) money transfers to almost anyone, student verification, and health savings accounts. One service you may NOT need is overdraft protection, which can cost you a fortune in fees.

If you want the high satisfaction and perks of a credit union, look for one that’s a member of a national ATM network, like the Co-Op system of nearly 30,000 fee-free ATMs and more than 5,600 shared branches. Make sure it provides online and mobile account access. Our survey found that credit union customers were among the most satisfied overall.

Begin your search by visiting the credit union websites we rate (available to subscribers) to see if you’re eligible for membership. If you don’t qualify for one on our list, go to the credit union locator on MyCreditUnion.gov to find one you can join. To access comparison stores, follow the links to the credit union websites.

Certificates of Deposit

Compare CD interest rates at rated online banks. On 12-month CDs, for example, Ally, Capital One 360, Discover, and Synchrony were paying between 1.75% and 2.05% annual percentage yield (APY) in March 2018, compared to 0.02% to 0.10%. From two central banks in New York. The best offer for the amount you plan to deposit and the period you invest will vary by institution.

Also, shop online at websites like Bankrate and DepositAccounts, which collect fee data from thousands of banks and credit unions. But be careful when reviewing search results on such sites: banks that don’t necessarily have the highest CD rates but advertise on the site may rank highest. So scroll down the list to check for better rates. None of these websites include all CD issuers.

Auto Loans

Choose a credit union for a car loan because those institutions often offer the lowest rates, another good reason to join one.

For example, credit unions charged only 2.79% on new 48-month auto loans, on average, in the fourth quarter of 2017, while banks charged 4.64%, according to the latest comparison from the National Association of Savings and Credit Cooperatives, using data from S&P Global Market Intelligence.

Have a lender pre-qualify you before you buy.

Credit cards and mortgages

Buy online if you are looking for a credit card or mortgage because the market for these products is national. Don’t restrict your options by limiting your search to, for example, the bank where you have a checking account.

For credit cards, use a comparison site like CreditCards.com. Use the credit card Adviser comparison tool for credit cards that pay cashback rewards. For mortgages, go to HSH.com. But check out other sites to broaden your search. Bankrate provides rates for credit cards and mortgages and car loans and CDs. And if you’re a Costco member, be sure to explore the rates your mortgage lenders offer.

Brokerage Services

As banks push their investment services, you can shop for the first time at one of the top-rated investment trusts, according to our most recent survey published in 2015. Such companies include Vanguard, T. Rowe Price, and USAA.

Prepaid Cards

If you want a prepaid card to use in addition to having a bank account, check out Bluebird, offered by Walmart and American Express and bank of America, or Liquid, provided by Chase. We found the top two among 20 ranked reloadable prepaid cards in 2016 due to their low rates and favorable terms to consumers. And both offer the same thing as a checking account.

Paper checks

Despite the ubiquity of electronic banking and our society with less and less cash, consumers still write many paper checks. But you don’t have to buy the statements at your financial institution. Instead, we found bargain prices at Costco and Walmart. Check the prices online at those two retailers and compare them to the cost at your bank or credit union.

How to change banks

It is not always easy to change banks. That’s partly because many people have their checking, savings, and other accounts linked to a single bank. Ironically, convenient banking features like direct deposit, automatic bill payment, and other services also make it difficult to switch banks since it requires more work to activate those services elsewhere. And bank account closing fees, rules, and other hassles are hefty enough hurdles that most people find it easier to sit still.

But it shouldn’t be that way. Consumers Union, the advocacy arm of Consumer Reports, has asked Congress and the Consumer Financial Protection Bureau to make it easier for customers to transfer funds, sign up for automatic bill pay, and set up direct deposits into new accounts. Consumers Union also wants banks to eliminate unfair account closure fees and prevent reopening closed “zombie” accounts.

But until regulators act, here’s how to switch banks in the easiest way possible:

1. Open a new checking account

For now, treat this as a secondary account at your new credit union, online bank, or smaller community or regional bank without closing the existing one. For most Internet banks, it’s a relatively easy online process; for others, the process can take 30 minutes to an hour and require an initial deposit of $50 or less.

2. Move direct deposit from your paycheck

Contact your employer to accomplish this. It may take your employer a few weeks to register your new bank information in their system. Direct deposit can also make you eligible for free verification. To get your new account up and running quickly, you can use your old bank’s online bank bill payment service or mobile bill payment service, as well as the new “Zelle” P2P money transfer service, to transfer funds to your new account. Or write a paper check to withdraw money from your old account and deposit it into the new one, but study steps 3 and 4 first.

3. Stop automatic bill payments

This can be quickly done over the Internet if you’ve been using the bank’s online bill payment feature, where you can control when so-called “push” payments are sent. If you pay automatically by authorizing a payee to “withdraw” the cost from their account, you’ll need to contact the company and follow their procedures to stop the payment. So, we recommend that you never use the “withdraw” method again so that you retain complete control of your account.

4. Keep the old account open

Make sure you keep your old account open until the last check you wrote has cleared and cleared.

5. Set up additional account features

Learn the digital features you need at your new institution and activate them. That includes online bill pay, mobile banking, P2P money transfers, and alerts.

6. Close old account

Say goodbye to your old bank while visiting your home branch in person. Zero out any remaining balance by having the old bank electronically transfer the funds to your new account or get a cashier’s check or cash. There should be no charge to close accounts you’ve had for more than a few months.

Result

There are more banking options than ever; do not tolerate unpleasant or overpriced banking services. By switching to a better financial institution that meets your needs, you could save hundreds of dollars a year in fees, earn higher interest rates on savings, and pay lower loan rates while getting better customer service. And you probably won’t have to give up the digital convenience of using ATMs, banking online and managing your accounts from your smartphone because even small community banks and credit unions now offer these services.