Bank-shopping? Here’s how to choose

Sheila McKean of the Federal Reserve Bank of Chicago has advice for those looking to choose a bank: Think of it as if you’re looking for love, she says; don’t just settle for the first one that comes along.

Instead, ask questions about what services a bank offers. Consider whether your lifestyle matches what an institution provides. Don’t allow yourself to be swayed by gifts or free checking accounts.

“The first thing as a consumer you really need to figure out is what you want from a bank,” says Katie Ross, education and development manager for American Consumer Credit Counseling outside Boston. “Most people don’t do that.”

This is a guide to selecting the right place to store your cash.

Know what you want

Ask yourself questions first, Ross says. Do you just want a checking account? Or a savings account, too? Do you want to use one bank for all your needs, including a mortgage, home equity line, car loan and other products? Are there discounts if you use the same bank for multiple services? Or are you willing to spread out your business?

Figure out whether you even know what services you should be looking for, McKean says.

“Do an honest assessment of whether you know how to deal with a bank. If you don’t know how to keep track of a savings account or balance your check book, consider going with an institution that’s education-friendly,” she says.

“When you’re talking to several different institutions, ask ‘Can you make time to explain this to me?’ and ‘Do you offer seminars or training?'”

Keep in mind that depending on where you live, your access to financial institutions will be different.

Consider your convenience

“Think about how you like to do your banking,” Ross says. “What kind of shift do you work? Is the bank going to be open?”

Visit the institutions you are considering in person and see how long it takes for someone to see you.

Does the bank offer online services that allow you to keep up with your account and pay your bills? If you are comfortable making all transactions online, on the phone and at ATMs, don’t forget to consider online-only banks, Ross says.

In addition to researching bank hours and locations, Ross says to ask where their ATMs are located and if they are part of a network of machines that won’t cost you a mint in fees over time.

Speaking of fees …

From time to time, it may be necessary to use an ATM that isn’t connected with your bank, Ross says. Find out what it will cost. And keep in mind you may pay two fees: one charged by your bank, and one from the institution associated with the ATM.

“People don’t realize that they’re being charged on both ends,” she says.

Aside from ATM fees, ask about the other fees the institution charges for the services you want, says Greg Hernandez, a spokesman for the FDIC.

Find out what the minimum balance is for each account, Hernandez says. “Do they charge fees if your account dips below a certain balance? Do they offer overdraft protection and how much does that cost?”

Overdraft fees — charged when you use an account with an ATM card or check, but are short on funds — will be reined in a bit later this year. On July 1, Federal Reserve rules kick in that say customers have to opt in to overdraft protection. At the moment, many banks automatically charge their customers, which can turn a $5 purchase into a $40 one if you count the cost of the item plus a $35 overdraft fee.

But the new rules don’t affect overdraft protection fees charged for keeping checks from bouncing.

In addition, there may be fees charged each day an account is overdrawn in addition to the amount tacked on for allowing the transaction.

Does your bank travel?

If you travel, ask if your bank will travel with you, McKean says.

“Depending on how mobile you are, looking at those ATM fees is extremely important,” she says. Ask about bank locations in other cities, states and countries, or if the bank is part of a network of banks.

If you will be traveling abroad and need cash, find out if a bank provides foreign currencies, what services are available outside the United States and what you will be charged for using your ATM and debit cards.

Compare rates

If you are shopping for interest-bearing accounts, compare rates among banks.

“If you want your money to work better for you, sometimes at an online bank you’re going to get a higher interest rate,” Ross says.

Consider the bank’s credentials

In an era of multiple bank failures a month, you may find it hard to figure out who to trust. Find out how your money is protected and what happens when a bank fails.