How to find the best bank for you

You probably don’t have warm, squishy feelings about the automotive industry. (“They make cars – that’s cool, I guess,” you might say.) Pharmaceuticals? Unlikely to make your heart sing. You might like the computer industry okay (“They do the internet, right?”), but you’re not writing love poems to your MacBook (okay…some of you might be). Telecommunications? Meh. Airlines? You’ve had your ups and downs.

You’re probably not in love with any major industry, but if there’s one industry the American people seem united in their disdain for, it’s banks.

Consumer finance publication American Banker and the Reputation Institute surveyed consumers to determine the reputation of 16 major American industries.

Banks came in dead last.

That’s probably not shocking, but what’s interesting about the survey is the discrepancy between how consumers view their bank versus how they view all other banks. The banks included in the survey averaged a score of 69.3 among customers. (A score of 70 or higher is considered a strong score, while a score below 60 is considered weak.) Among non-customers, however, the average dropped nearly 14 points to 55.5.

“It could be worse…”

On the one hand, that discrepancy makes some sense. It’s not especially logical to think that your bank is worse than everyone else and then continue to bank there (unless you’re some kind of money masochist). I think that my favorite grocery store is better than the other available grocery stores – that’s why I shop there.

It’s the size of the difference that raises red flags. On average, regional and nontraditional banks scored more favorably with customers and non-customers alike, however, as of 2012, nearly 80 percent of all deposits were held by only 10 different banks.

A more likely explanation is that banking customers, by and large, think that what they’ve got is the best available, because everything else is just so very, very lousy. In other words, consumers have come to develop very low expectations – and that may be costing them a lot of money.

Pros and cons

It’s easy to take that “Everything is terrible, so I guess what I’ve got is good enough” approach, but you do yourself no favors when you don’t take the time to comparison shop.

In a recent survey of bank fees, Money-Rates.com found the following:

• Nearly 70 percent of all checking services come with some variety of monthly fees.
• The average monthly service fee for checking accounts is currently $12.43.
• The average overdraft fee is currently $31.60.
• Online banks (those without physical branches) have, on average, lower monthly fees, lower overdraft fees and are more likely to offer a free checking option.
• Large banks have, by and large, slightly higher monthly and ATM fees than their smaller (regional) counterparts. However, local banks tend to have the highest overdraft fees.

Every bank is different, and there will be pros and cons to every available option, but a lot of those pros and cons are probably going to resonate more strongly with you depending on your banking habits.

The best bank for me

In order to know which bank is the right bank for you, you need to understand what kind of customer you are.

Look back over your bank statements for the last 12 months. (If you don’t have your old paper statements, see if your bank has an online banking option. If that’s not available, call your bank and request copies of your old statements.) How do you use your bank account? A lot of trips to the ATM? A lot of overdraft fees? When was the last time you visited an actual bank? Do you even write checks anymore?

Do a thorough inventory of your banking behaviors and see what behaviors are the most costly. Now take that information and really look at what’s out there. If you do everything online anyway, maybe a purely online bank is a better option for you. If you need a physical branch and rarely, if ever, overdraft your account, maybe a small, regional bank is right for you.

And maybe your current bank is the best bank for you. That’s how it should be. But if you haven’t taken the time to verify that then how do you know you aren’t throwing away money every single month?