Learn about different types of financial institutions for checking/savings accounts: big banks, credit unions, community banks, and FinTech apps. Explore the benefits of choosing a big bank for ease of use and global presence. Compare major banks to credit unions and learn about advantages of community banks. Discover how FinTech apps offer competitive fees and better user experience on mobile/computer.
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Quick takeaways
Consider your needs and evaluate options: major banks for convenience, credit unions for customer benefits, community banks for personalized service, and FinTech apps for tech-savvy convenience.
Compare fees across options: major banks may eliminate fees, credit unions have lower fees, community banks offer personalized service, while FinTech apps have lower fees but carry startup risk.
Deep dives
Key Point 1: Choosing the Right Bank or Financial Institution
When selecting a bank or financial institution, it is important to consider your specific needs and priorities. The options include major banks, credit unions, small community banks, and financial technology (FinTech) apps. Major banks offer convenience and global presence, making them suitable for cash transactions and international travel. Credit unions, on the other hand, are member-owned and prioritize customer benefits, such as lower fees and higher savings rates. Small community banks provide personalized service and a localized experience. FinTech apps cater to the tech-savvy generation, offering convenience and better deals on fees while partnering with FDIC-insured banks for safety. Understanding your preferences and evaluating the features of each option can help you choose the best institution for your banking needs.
Key Point 2: Consideration of Fees
Fees vary across different financial institutions. Major banks traditionally had maintenance fees and ATM charges, but some now eliminate fees or reimburse certain charges, enhancing their appeal. Credit unions generally have lower fees compared to major banks, while small community banks offer a balance between personalized service and top-level features. FinTech apps often have lower fees due to their digital-only approach and lack of brick-and-mortar costs. However, it is essential to note that FinTech apps are not FDIC insured and carry the risk of startup viability. Overall, comparing fees across options can help you find a bank that aligns with your financial preferences and minimizes unnecessary charges.
Key Point 3: Risk and Safety Considerations
The safety of your funds is an important consideration when selecting a bank. Major banks and credit unions typically offer FDIC or NCUA insurance, respectively. These government-backed insurances protect up to $250,000 per account per institution. Small community banks may offer personalized service but may lack the advanced technology and features of major banks. FinTech apps operate without physical locations and partner with FDIC-insured banks to provide insured products and services. However, the risk lies in the startup nature of FinTech apps, as they may face challenges in maintaining capital flow. Considering the safety factors and aligning them with your risk tolerance can assist you in making an informed decision on selecting a bank or financial institution.
It's easy to feel stuck with the bank account you've had forever, even if it's inconvenient or racking up fees. But there are lots of options out there. We walk through four types of financial institutions and companies for a checking or savings account: big banks, credit unions, community banks and newer financial technology apps.
