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About Ken Tumin

Ken Tumin founded the Bank Deals Blog in 2005 and has been passionately covering the best deposit deals ever since. He is frequently referenced by The New York Times, The Wall Street Journal, and other publications as a top expert, but he is first and foremost a fellow deal seeker and member of the wonderful community of savers that frequents DepositAccounts.

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Choosing a New Bank - Why You Want at Least Two Banks or Credit Unions

I've seen several articles like this recent one at the Wall Street Journal, How to Pick a Bank. Most of them assume that you're shopping for one new bank. In my opinion, there's no reason to limit yourself to one bank. At minimum it makes sense to have two banks or credit unions: the first one with branches that are local and the second one that's an internet bank or credit union.

A local bank or credit union can be useful for making cash deposits and for services like safe deposit boxes. A branch that's conveniently located is one important consideration. However, for credit unions that are part of the shared branch network, that is less important. The shared branch network allows you to perform many banking transactions at a shared branch just as if it were your own credit union. However, shared branches have some limitations. For example, cash withdrawals may be limited to $500. So having your credit union conveniently located has some advantages.

The other important feature to look for at a local bank or credit union is a totally free checking account. You might first want to check if there are any local banks or credit unions offering a high-interest reward checking account. The vast majority of reward checking accounts are free with no monthly fees regardless of meeting the monthly requirements. So even if you don't care about interest rates, reward checking accounts should be considered.

Once you have a checking account at your local bank or credit union, it's easy to open an account at an internet bank. The internet bank will likely provide advantages over your local bank or credit union. One is higher interest rates for savings accounts and certificates of deposit. In addition to higher rates, they can give you more access to free ATMs. For example, at Ally Bank ATM fees charged by other banks are automatically refunded for any ATM worldwide. Other features that you will often find to be better at internet banks include online bill pay, bank-to-bank transfers and mobile banking. ING Direct and EverBank are two internet banks that offer mobile banking. EverBank also offers an online check deposit service in which you can scan your checks at home to make deposits without having to mail in the checks.

An internet bank doesn't necessarily have to be a bank. It could also be a credit union. One example is Alliant Credit Union. They have many branches in Illinois and in other states. However, Alliant has made it easy for people to join and open accounts online. As I described in my recent Alliant Credit Union review, they have many of the same features of the best internet banks. Also, anyone can join by an association membership.

If you were to limit yourself to only two banks, which would be your internet bank (or credit union)? Would the other one be a local institution? And what are the important services for your local institution?

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Anonymous   |     |   Comment #1
For Internet banking, I choose ING Electric Orange. They offer 1.25% on checking and have a VERY user friendly interface. The only downside to ING is their lack of remote deposit.


For local banking, I choose Bank Of America for their multiple ATM's. With their newer ATM's, you never need a branch visit as you can deposit checks and get instant verification with check image on your receipt.
tightwad   |     |   Comment #2
Anyone with any liguid assets is a fool to limit themselves to only one or 2 banks. If you are you are giving your money away. If you are like most and living paycheck to paycheck, that's a different story.
Anonymous   |     |   Comment #3
I use chase as local, mostly because free checking w/o direct deposit required, and perks on my chase reward credit cards. Another vital local service is medallion signature guarantee, which is needed for IRA/brokerages to close/move accounts or change what account they use for ACH. Internet is 5 year CDs at ally and alliant (2 because FDIC coverage limits), and costco capital one for liquid (and alliant checking).
cactus   |     |   Comment #4
Excellent article.

With Internet banking, there is no need to limit yourself to one or two financial institutions.

A given outfit is usually competent and price-competitive at only some of the services you need.
CVSAFE GUY   |     |   Comment #5
Great article, do not limit yourself to one bank.  Have several, however do not pay for accounts.  Make sure your accounts are free. 
Anonymous   |     |   Comment #6
Yup, great article. Ditch the Bank of Americas and Chases of the world, and go to Credit Unions and smaller banks that will appriciate you and not rip you off. Remember that if you're a member of a credit union, chances are they are members of Co-Op network, a shared ATM network, with something like 40,000 fee-free ATMs across the country. I deal with 3 credit unions and two (smaller) banks. Couldn't be happier. I severed ties with BofA long ago. Never looked back.
Deborah Curran
Deborah Curran   |     |   Comment #7
I really enjoyed your article on having 2 banks> Would never have thought about an internet bank but nw I see they do have higher rates. Your posts also help me shop around for best rates. Thank you. BTW also like the idea of getting bonus'. !!
tightwad   |     |   Comment #9
Not to jinx myself, but I have actually had less troubles with online banks then my local brick and mortar ones. As an older guy with limited computer skills, it is pretty painless and easy to open accounts...If someone would have told me I would have multiple online accounts 6-7 years ago, I would have said they were nuts.

If your savy enough to find this site, your smart enough to bank online.
Robert R
Robert R   |     |   Comment #10
I have used both the big bank as well as the small home town (local bank) here in NY.  The big bank has more features and programs to offer but the small local bank has worked the best for me.  It is important to me and my business that I receive the service that I need without having to go through multiple levels of management at the big bank.

With that being said I do have an online account with ING and I have been rather pleased with their programs and the interest rates they pay.  I think having booth accounts is a good thing for everyone.

Thanks for the post.
Julio   |     |   Comment #11
I have Bank of America as my physical bank, mainly because of their advanced ATM machines that are just about everywhere.  I have never actually had the need to step inside the bank with these ATM’s.  Since I have my Mortgage with them (not by choice) I was able to get the highest rated account with all the perks and not have to meet any of the requirements to do so.  I also have a Chase checking/savings (WaMu when I opened it) and use this as my primary account, mostly managed online, since they don’t have as many branches in my area.  I keep just enough in these account to handle the monthly activities.  I then have various online account that I use to chase the better rates.  Not what they used to be, but I have not given up yet.


Bottom line…  If you have a mortgage, it may be worth looking into linking it to your checking account relationship to help meet the requirements for all the extra perks.
Anonymous   |     |   Comment #12
Question- is anyone familiar with IOLTA accounts?  (Trust account required by law in Texas where client retainer fees are maintained and interest paid directly to Texas State Bar Assocation.)  Interested in looking at online banks but not sure they offer this service. 

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