Best Banks and Credit Unions

To narrow down to our top three picks, we looked for excellent customer service, online banking options, an extensive ATM network, mobile app options, high interest rates on savings accounts, low interest rates on loans, investment opportunities and opportunities to build credit. We only considered banks or credit unions that are financially stable and backed by either the Federal Deposit Insurance Corporation or the National Credit Union Administration.

Company name Contact Authorized Partner Merrick Bank is good for those with low credit who are looking to rebuild their credit scores and prefer an online banking experience.

Logo Summary PROS Credit cards for low credit applicants Excellent customer service CONS No traditional checking or savings accounts No physical branches

What we like: Customers praise Merrick Bank’s customer service and their ability to help build credit. Merrick’s high-yield certificate of deposit (CD) comes on a 12-month term with a 2.84 percent APY. A minimum deposit of $25,000 is required. Merrick also specializes in boat, RV and horse trailer loans.

Merrick specifically designed their credit cards for people looking to rebuild their credit. Offers for their platinum and secured Visa cards are extended to qualifying candidates. Existing Merrick customers can also recommend candidates. Both Merrick cards come with several perks, including a monthly credit score check for free, account alerts and mobile access.

What to consider: If you prefer a brick-and-mortar bank or speaking to someone face-to-face, an online-only bank like Merrick Bank might not be the best option for you.

Company name Contact Wells Fargo is good for small businesses looking to take out loans, but it’s also a safe choice for anyone opening a new account.

Logo Summary PROS Experienced SBA lender Additional business services CONS Short maximum loan length Savings accounts have low interest

What we like: Wells Fargo offers short- and medium-term loans, lines of credit, equipment finance and Small Business Administration (SBA) loans. Wells Fargo is the largest SBA lender in the country. Loan sizes range from $10,000 to $100,000, with an initial interest rate of 6.75 percent. Terms are one to six years.

You can also choose from four different checking accounts depending on your small business’ needs. These accounts have monthly fees that can be avoided by maintaining a minimum balance. With the Business Choice Checking account, you can make deposits of up to $7,500 without incurring a fee. You can also enroll in HR, business tax services and payroll for your business. Wells Fargo also has an extensive network of ATMs.

What to consider: The maximum term length for a loan is only six years, much shorter than some other banks. Their checking accounts have fees if you don’t maintain the minimum balance requirement.

Company name Contact The lack of fees and minimum balance requirements make Ally good for college students looking for hassle-free banking.

Logo Summary PROS No maintenance fees Extensive ATM network CONS No physical locations Only loans offered are auto loans

What we like: The best thing about Ally Bank is that there are no maintenance fees and no minimum balances for any of their customers. They have also partnered with the Allpoint ATM network, which has 55,000 ATMs in its network. Ally will even reimburse customers up to $10 per statement on ATM fees that come from ATMs outside their network.

The Ally CashBack Credit Card has no annual fee, 2 percent back on gas stations and groceries and 1 percent back everywhere else. Users can earn a $100 bonus after spending $500 within three months of opening their account. If you deposit your bonus or cash back into an Ally account, you’ll receive a 10 percent bonus.

What to consider: If you are looking to take out a loan with your bank, it’s important to keep in mind that Ally only offers auto loans. Also, if you use an out-of-network ATM, you’ll be charged a fee, but Ally does provide $10 in ATM reimbursements per statement.

If you know what to look for in a bank, choosing a bank doesn’t have to be hard. The most important things to know are the types of account or financial services you want and if you prefer a traditional bank, online-only bank or a credit union. From there, it’s a matter of finding the bank or credit union that most closely fits your needs. Follow these steps to find out which bank is best for you:

1. Look at your spending habits
   The best way to know what type of financial institution is right for you is to look at your current spending and saving habits. When you know how much money you currently have saved, it will be easier for you to choose a savings account with a maintainable account balance minimum.
2. Consider a credit union or online bank
   Traditional brick-and-mortar banks with physical bank branches aren’t the only types of banks out there. Credit unions are nonprofit institutions that often have higher interest rates on savings accounts and lower interest rates on loans. If your lifestyle is cashless, online banks could be good banks for you because you’ll get higher interest rates on your savings account.
3. Decide what types of accounts and financial services you want
   In addition to opening a savings account or checking account, decide whether you are also interested in loans or credit cards. Most banks offer a range of credit card options from debit to secured credit and everything in between.
4. Examine fees
   Hidden bank fees can make for nasty surprises on a monthly statement. Some accounts require customers to maintain a minimum balance at all times to avoid a monthly surcharge. Others waive these fees for those with direct deposit or student accounts. Withdrawal fees can be another issue. Some types of accounts limit the number of free withdrawals. Once you meet that minimum, future transactions can carry a small fee.
5. Look at interest rates
   Bank interest rates vary widely. When opening a savings account, customers can request the interest rate structure in advance. Credit unions sometimes offer higher saving and lower lending rates.
6. Find the local ATMs
   If you use cash often and like the convenience of withdrawing money from an ATM, check to see if your chosen bank has a wide array of ATM locations and what sorts of fees they carry, if any. Most banks and credit unions allow customers free ATM use, but some charge a few dollars per transaction when using an out-of-network ATM. Out-of-network ATMs may result in dual charges: one from the customer’s bank and one from the ATM owner.
7. Consider the financial stability of the bank
   Make sure your bank of choice is backed by the Federal Deposit Insurance Corporation (FDIC). The FDIC typically insures accounts up to $250,000. For credit unions, look for backing by the National Credit Union Administration (NCUA), which is the credit unions’ equivalent of the FDIC. The NCUA regulates credit unions and protects consumers with insurance that typically covers balances up to $250,000 per share owner.
8. Look at investment options
   If you’re looking to invest in a retirement account or a mutual fund, it’s convenient to have your investment accounts at the same bank as your checking and savings accounts. You can also look into a Certificate of Deposit (CD). CDs are temporary savings accounts with a high interest rate.
9. Decide if online banking is important to you
   At the bare minimum, you should look for a financial institution that allows you to review your accounts, order checks and transfer money between accounts online. Consumers with a smartphone may want to take advantage of the mobile banking apps for check deposit, bill pay, money transfer and general account access on the go. Online bill pay is another essential feature if you want the convenience of paying bills online quickly with the touch of a keystroke.
10. Visit a local bank branch or call customer service to ask questions
    If you’re looking to join a local bank, it’s a great idea to visit the bank in person to see if you receive friendly customer service and if all your questions are adequately answered. Conversely, if you're interested in an online bank, you can call to ask whatever questions you may have. You can also go online to see if the bank’s site has a chat where you can speak to an online representative.

Retail banks

Also known as consumer banks, these are what most people think of when they picture a bank. Retail banks’ services and products focus on the individual consumer with local branches, ATM access, auto and home loans and more. Unlike investment banks, retail banks do not work with large corporations. Retail banks deal directly with retail customers. Most banks today are broader in scope, with several divisions representing their client base.

Commercial banks

A commercial bank accepts deposits, provides loans and offers investment products for a range of clientele. Historically, a commercial bank is a brick-and-mortar operation, however, today there are online commercial banks as well. Commercials banks’ chief source of income comes from collecting interest on loans.

Online banks

Traditionally, banks have had physical locations, and you had to visit them to do business with them. Now, most major banks have online capabilities, and some banks are exclusively online. Consumers can sign up for accounts, access these accounts and tend to all their financial needs online. Online banks are also known as direct banks, virtual banks or branchless banks.

Investment banks

Investment banks are typically business to business banks. These institutions specialize in large and complicated financial transactions such as underwriting a new stock issue. Some investment banks also have retail arms that cater to the public.

Credit unions

Credit unions are not-for-profit financial institutions created to serve their members. They typically offer the same products and services found at a bank. Benefits often include higher interest rates on savings accounts and lower interest rates on loans. Credit unions typically have membership requirements like working for a particular company or industry, attending a specific church or living in a specific area of town.

Savings and loan associations

A savings and loan association (S&L) is a financial institution, similar to a bank, that specializes in helping people secure mortgages for their homes. They allow members to pool money to be able to purchase a home. Members have voting rights and are allowed to direct the management of the organization. Savings and loan associations are also known as thrifts.

Mutual banks

A mutual bank is a financial institution that is chartered by a national or regional government and owned by its members. Members can save and invest in loans, stocks, mortgages and bonds. They collectively bear the resulting losses or reap the rewards.

Shadow banks

“Shadow banking” is a pejorative term used to describe financial institutions that provide services similar to those offered by traditional banks, but not subject to typical regulatory oversight. A more neutral term is “market-based finance.” One example of shadow banking is hedge funds.

Central banks

A central bank is a monetary authority that controls the production and distribution of currency. The director of the central bank is appointed by the most senior member of the executive branch (in the United States, the president), and the legislature must vote to approve them. In the U.S., the Federal Reserve System serves as the central bank.

Credit unions and banks are both financial institutions that offer checking and savings accounts. They do, however, have some important differences.

Credit unions typically have higher interest rates on savings accounts and lower interest rates on loans. Due to their local nature, and because they are nonprofits, they are also known for emphasizing customer service. Credit unions are designed to benefit their members rather than earn profits for a corporation. For this reason, they are an attractive option for many consumers. When you join a credit union, it’s similar to buying stock in a company. Members vote for who will join the board of directors and ultimately make the decisions affecting the credit union.

Traditional banks have more branches throughout a region or an entire country, so they are easier to access. They are also typically more up-to-date when it comes to the latest technology and can offer a more extensive array of financial services than credit unions do.