How should I choose the right bank?

Friday, May 29th, 2009

How should I choose the right bank?

How to choose the right bank

Choosing the “right” bank or credit union is primarily a subjective, not quantitative decision for you. However, there is one component that should be based on hard facts, not just personal preference.

When you compare banks or credit unions, you should access their financial statistics, which is public information, from the FDIC (banks) or NCUA (credit unions). This important ability allows you to evaluate the strength and stability of financial institutions you’re considering.

Your remaining decisions are typically a matter of personal preferences. For example, if you’re more concerned about earnings on your deposits, the right bank for you might be the one that offers the highest interest rates on savings accounts, regardless of their lending policies.

Conversely, if your predominant concerns are obtaining the best loan terms for mortgages, auto loans, and/or credit cards, you might focus on those institutions that are “aggressive,” offering excellent loan rates and liberal lending decisions.

Often, however, the best options for many people are those banks and credit unions that are "overall" performers. A good banking comparison might include those institutions that have a wide array of savings accounts, with good choices for both modest and larger depositors. Add to this, those institutions that offer an extensive menu of loan products, reasonable prices (rates), and liberal lending criteria.

You might complete your banking comparison by evaluating the online banking ability offered, the convenience of neighborhood branch offices, and/or the institution’s involvement in your local community.

This evaluation is a good way to compare banks to choose a “primary financial institution,” which is your preference for a bank or credit union to serve as your first option for most services. You can then select other institutions for specific products that you require from time-to-time.

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