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Most banks and credit unions enable you to place your money in: Understanding the pros and cons of each type of financial institution can help you begin narrowing down your options.Ĭheck out our shortlist of the best online checking accounts if this is the right option for you. It all depends on how you plan to use your money and what you value most - easy access, favorable interest rates, customer service, or something else. There is no clear winner in the brick-and-mortar bank vs. Some banks have ATM networks where you can withdraw cash for free, but if you don't live near one of these or you need to withdraw a large sum of money at once, you'll probably have to transfer the funds to a bank account in your name at a brick-and-mortar branch so you can get your money out. The biggest drawback of online banks is that accessing your funds can be more difficult. Avoiding branches helps keep online banks' overhead costs low and they are able to pass their savings along to their customers in the form of high interest rates on bank accounts and low interest rates on loans. If you need help, you must contact the online bank by phone or email. They're similar to brick-and-mortar banks, except they don't have any branch locations. Online banks are fast becoming one of the most popular places for people to park their cash. Not for: Those who prefer in-person customer support and those who need fast access to their cash. What is an online bank?īest for: Those seeking the best interest rates on loans and bank accounts and advanced online banking tools. Instead, they're backed by the National Credit Union Association (NCUA), which works the same way as the FDIC does for banks, insuring customer funds up to $250,000 per account against credit union failure. But they still draw many customers because their customer service is often better than some large national banks' and they often have lower interest rates on loans and higher interest rates on checking and savings accounts.Ĭredit unions are not backed by the FDIC. They also tend to have fewer product offerings than larger banks. They usually don't have the advanced online banking tools or the large network of branches or surcharge-free ATMs that can be useful to those who travel often. Most credit unions are small local or regional institutions. If you're considering a credit union, look over its membership requirements to ensure that you're eligible to join before you start filling out any applications. Some only require you to pay a small membership fee to open a credit union account while others only allow people in a certain geographic area or members of a certain organization, like the military and their family members, to join. Not for: Those interested in rarer product offerings, like business bank accounts or money market accounts (not all credit unions offer these).Ĭredit unions are nonprofit organizations owned by their members. What is a credit union?īest for: Those who want good customer service and more favorable interest rates than brick-and-mortar banks. For the best bonuses this month, check out our roundup of the best checking account promotions. Many checking accounts also offer a sign up bonus. This means that if the bank were to go under, the FDIC would pay you the amount you had in your account up to this limit so you wouldn't lose your savings. Up to $250,000 of the money in your bank account is protected by the Federal Deposit Insurance Corporation (FDIC). However, because banks have so many buildings to operate and people to pay, they often charge higher fees and offer lower interest rates on checking and savings accounts than credit unions or online banks. Most have hopped on the bandwagon with online banking features, like mobile check deposit and online bill pay, but you can still visit a branch location in the bank's service area if you'd like in-person support.Īnyone can join a bank and they'll usually enjoy a wider variety of services than credit union members, including checking and savings accounts, personal and business loans, credit cards, certificates of deposit (CDs), money market accounts (MMAs), and other investment products. Some banks are regional while others are national, but they're typically larger than credit unions. Banks are for-profit institutions owned by a group of investors. You're probably familiar with brick-and-mortar banks, even if you've never had an account with one. Not for: Those who want the lowest fees and the most favorable interest rates. What is a bank?īest for: Those who want a variety of product offerings, advanced online tools, and easy access to their funds. The first decision you'll have to make is whether you'd like to put your money in a brick-and-mortar bank, a credit union, or an online bank.