We all have different needs when it comes to banking services. Fortunately, we have many more options now than we did even a few years ago, thanks to such innovations as online banking. True, many regional and national banks have been absorbed by larger banks, but those banks now provide a wider array of services than before, albeit typically with higher fees.
You may find that, based on your specific needs, you are better off using different organizations for each of your banking services. Others will find that one bank can provide a bundle of services at attractive enough costs to keep all their business there. The prudent consumer will base his or her selection on a full analysis of the benefits and costs of all banking alternatives.
You have a lot of options. What is most important to you? Is it a variety of services, convenience, cost -- or, most likely, a combination of these? You can select a traditional bank (large or small), a credit union, online bank, or one or more of these.
Large banks provide convenience, a wide variety of services and online capability. Most large banks can provide you with a specialist regarding financial services. Some have a banker that specializes in small business loans. Unfortunately, fees will likely be higher at large banks than at the alternatives, and lately many large banks are increasing their fees. Nonetheless, sometimes, for a specific service, a large bank will provide you with the best value (this is generally the case with credit cards). That's why it's important to include them when judging the available alternatives for a particular service.
A few years ago, I wanted to have a home-equity line of credit. I did not need a loan, but I wanted to have access to funds with good terms. The best offer I could find was with SunTrust, a large local bank. I was able to obtain a large credit line at a reasonable rate, with multiple options. There were no fees, even if I never accessed the account.
Small community banks generally provide good personal service, lower fees, better loan rates, and higher interest rates on deposits than larger banks. (However, don't assume that is always the case; you have to compare.) Many small banks specialize in small-business loans. If you are looking for a local bank that makes small-business loans, contact the nearest office SCORE, a nonprofit dedicated to counseling budding entrepreneurs.
Credit unions generally offer lower fees, lower loan rates, and higher interest rates on deposits than the competition. They are able to do this because, as nonprofits, they have a tax advantage over banks. Some credit unions provide various services by volunteers, which also gives them a competitive advantage. Although some credit unions have restrictions regarding membership, in most areas, you will be able to find a credit union to join. A few years ago, when I purchased a new car, I used a local credit union that offered the best interest rate.
Anyone can join the Pentagon Federal Credit Union (http://www.penfed.org). This credit union provides a wide variety of online services and has very attractive rates for auto loans and certificates of deposit. For more information on credit unions, including listings of those in your area, visit the web site of the Credit Union National Association (http://www.cuna.org).
Online banks, because of low overhead, generally offer a higher interest rate on a basic savings account and lower fees for other services. There are generally no fees and no minimum deposits. Depositors can usually access their accounts by mail or phone as well as online.
A good resource to consult when considering online banks is MyBankTracker (see the page http://www.mybanktracker.com/best-online-banks). The site rates these banks on the basis of fees, rates, technology and customer service. Some banks that earn high marks there are Ally, USAA, Charles Schwab, Bank of Internet, Sallie Mae Bank, UFB Direct, ING Direct, State Farm Bank and HSBC Advance. Their websites will include the current rates on CDs so you can comparison shop. Your deposits at these banks are FDIC insured.
To make the most of your money, analyze your most important banking needs and then comparison shop. Don't be surprised if you decide that using more than one bank is best for you.
(Elliot Raphaelson welcomes your questions and comments at email@example.com.)Copyright © 2014, The Baltimore Sun