Bank & Credit Union Buying Guide
Getting Started

If you’re like a lot of Americans, you have a checking account at one of the nation’s four largest banks: Bank of America, Chase, Citibank, and Wells Fargo. Together, these mega banks hold about 46 percent of all U.S. commercial bank assets, and they provide many benefits such as nationwide convenience, state of-the-art digital banking platforms, and sophisticated security systems.

What We Found

In our survey of some 49,000 subscribers, all four mega banks scored in the bottom fifth of our overall bank rankings.

It’s not because their services were poor—our readers were satisfied with them overall. Rather, survey respondents told us they found better banking alternatives at more than 60 smaller banks—including some that operate mostly online. They were also more satisfied with the services they got at credit unions, especially when it came to customer service and fees.

If you’re happy with the services and fees at your current bank, you are fortunate. But if you are looking for an alternative, you have plenty of options. Here’s how to find the best institution to meet your banking needs:

Shop Around
If you have your checking and savings accounts, along with, say, a mortgage or a car loan, at the same bank, you may get certain benefits, such as preferred interest rates and fee discounts. But when you buy a bank’s “product bundle” that contains a number of services rolled into one offering, it’s hard to know whether the fees you pay are lower than if you opted to get different services at different banks.

Most likely, you can save money by shopping around for the best deal at different financial institutions. That’s what many subscribers in our survey do. Half of those in our sample told us they had a second bank or credit union. The reason: Almost 38 percent of our respondents indicated that they were able to get better rates for some services and products at institutions other than their primary bank or credit union.

A case in point: 37 percent of subscribers who reported that they had loans relied exclusively on the second institution for them. And 41 percent of those with investment accounts at banks or credit unions had them only at their second financial institution, not their primary bank or credit union.

Key Bank Products and Services

How can you get the best service and the lowest fees? Follow this mix-and-match plan for maximum savings: 

Checking
A checking account is the engine of household personal finances, and financial institutions of every size–from mega banks to small community banks to national and local credit unions–typically offer all the key services and technologies you need. Those include online and mobile banking, direct paycheck deposit, debit card access to your money through nationwide bank-owned or fee-free ATM networks, online bill payment, remote check deposit using your smartphone, fast digital person-to-person (P2P) money transfers online and by mobile device to almost anyone, student checking, 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 advantages of a credit union, look for one that is a member of a network, such as the Co-Op system of 28,000 fee-free ATMs and 5,000 shared branches. Make sure it provides online and mobile account access. Our survey found that credit-union customers were among the most highly satisfied overall.

Start your search by checking the websites of the credit unions we rated (available to subscribers) to see whether you’re eligible for membership. If you don’t qualify for any on our list, go to the credit union locater of MyCreditUnion.gov to find one that you can join. Comparison shop by following the links to the credit unions’ websites.

Certificates of Deposit
Compare interest rates for certificates of deposit (CDs) at the primarily online banks we rated and at credit unions. Both types of institutions generally pay the highest rates. The best deal for the amount you plan to deposit and the period of time for which you invest will vary based on the institution.

Also comparison shop online at websites such as Bankrate, DepositAccounts, and MoneyRates.com, which aggregate financial rate information. 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 might get top position. So scroll down the list to check for better rates. None of these websites includes every CD issuer, but DepositAccounts covers 6,139 financial institutions offering one-year CDs, for example.

Auto Loans
Choose a credit union for a car loan because those institutions often offer the lowest rates—another good reason to join one. Get prequalified before you shop.

Credit Cards and Mortgages
Shop online if you are looking for a credit card or mortgage because the market for these products is national. You don’t want to limit your options by confining your search to, say, the bank where you have a checking account.

For credit cards, use a comparison site such as CreditCards.com. For credit cards that pay cash-back rewards, use Consumer Reports’ Credit Card Adviser comparison tool. For mortgages, go to HSH.com. But check other sites to broaden your search. Bankrate provides rates for credit cards and mortgages, as well as auto loans and CDs. And if you’re a member of Costco, be sure to explore the giant wholesaler’s credit card and the rates its mortgage lenders offer.

Brokerage Services
Banks push their own investment services, but shop first at one of the higher-rated investment companies in our most recent survey: Vanguard, T. Rowe Price, and USAA. 

Prepaid Cards
If you want a prepaid card, check Bluebird, offered by Walmart and American Express, or Liquid, offered by Chase. We found both of them best among 20 reloadable prepaid cards rated in 2016 because of their low fees and terms that are favorable to consumers. And both do almost everything that a checking account does. 

Paper Checks
Despite the ubiquity of electronic banking and our increasingly cashless society, consumers still write a lot of paper checks. (Our most recent data shows that 19 billion checks were written in 2015). But you don’t have to buy checks from your financial institution. Instead, we found bargain prices at Costco and Walmart. Check the prices online at those two retailers and compare them with the cost at your bank or credit union. 

How to Switch

It’s not always easy to switch banks. That’s partly because many people have their checking, savings, and other accounts linked together at one bank. Banking services, such as direct deposit, automatic bill pay, and other services, also make switching banks more difficult because it requires more work to activate those services somewhere else. And bank-account closing fees, rules, and other hassles are big enough obstacles that most folks find it easier to just stay put.

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

But until regulators take action, here’s how to switch banks as painlessly as possible:

1. Open a New Checking Account
Temporarily treat this as a secondary account at your new credit union, online bank, or smaller regional or community bank without closing the existing one. For mostly Internet banks, that’s a relatively easy online process; for others, the process may take 30 minutes to an hour and require an initial deposit of $50 or less. 

2. Move Direct Deposit of Your Paycheck
Contact your employer to accomplish this. It may take your employer a few weeks to get your new bank information into its system. Direct deposit may also make you eligible for free checking. To get the new account up and running fast, you could use your old bank’s online or mobile banking bill pay service, or the new “Zelle” P2P money transfer service, to transmit funds to your new account. Or simply write a paper check to withdraw money from your old account and deposit it into the new one, but see steps 3 and 4 first. 

3. Stop Automatic Bill Payments
This can be easily done via the Internet if you’ve been using the bank’s online bill pay feature, where you control when so-called “push” payments are sent out. If you auto-pay by authorizing a payee to “pull” the payment from your account, you’ll need to contact the company and follow its procedures for stopping payment. Then we recommend that you never use the “pull” method again so that you retain complete control of your account. 

4. Keep the Old Account Open
Be sure to keep your old account open until the last check you wrote has been cashed and has cleared. 

5. Set Up Additional Account Features
Familiarize yourself with the digital features you need at your new institution and activate them. That includes services such as online bill pay, mobile banking, P2P money transfers, and alerts.

6. Close the Old Account
Kiss your old bank goodbye by 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 by obtaining a cashier’s check or cash. There should be no fee to close accounts you have had for more than a few months. 

Bottom Line

There are more banking options than ever so, don’t tolerate unpleasant or overpriced banking services. By upgrading to a better financial institution that matches your needs, you could save hundreds of dollars per 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 all the digital convenience of using ATMs, banking online, and managing your accounts from your smart phone because even small community banks and credit unions now make these services available.

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