If you are an active participant in the economy there’s no practical way to avoid needing a bank account. For years there was a growing belief that cryptocurrency potentially provided an alternative avenue, but the recent volatility and subsequent regulatory crackdown have thrown a wrench in that thinking (for now). The dislike and distrust for banks is mainly a millennial and gen-Z phenomenon as bank account adoption by the older generations continues to be more than 90%.
This post is a guide for consumers that are less familiar with the banking landscape in the United States and want to know how to find the best banks, what to look for and of course, what some of the best banks are in the country.
Prioritize Safety and Security
This should go without saying. As you decide where to keep your money you should prioritize choosing institutions that have a demonstrated high level of safety and security. This includes ensuring that the banks have insurance from the Federal Deposit Insurance Corporation (FDIC). It also includes making sure that the banks have a track record of protecting their customers from scams and hacks, which seem to be increasing significantly as financial services become more digital.
Size Matters: Financial Services is a Scale Business
Banks are in the business of collecting deposits from consumers and using those funds to provide loans back to other consumers and businesses. These loans can be traditional mortgages, credit cards, loans for automotive purchases and other consumer loans. Scale is one of the most important characteristics for a bank because it provides stability and allows the bank to offer more attractive services. Stability stems from the fact that if you have a larger base of depositors, then almost by definition your deposit base will be more stable than if it were significantly smaller.
To illustrative this dynamic let’s use an example. If a bank has $1,000 in deposits from 2 customers, then if they lose a customer, they will lose 50% of their deposits. However, if a bank has $100,000 in deposits from 200 customers, the impact of losing one customer is a less than 1% impact on their deposit base. It simply is statistically insignificant. A larger base of customers provides stability. As a result of this any list of the best banks in the USA is bound to be dominated by the largest banks in the country.
3 Best Banks in the United States
The 3 Best Banks in the country are also among the largest banks and are all national banks which means you’ll be able to access their services from most states. Without further ado these are the banks that made our list:
1. Wells Fargo Bank
Wells Fargo Bank is one of the few banks in the country that has a presence in all 50 states. The bank has over 4,000 branches in the United States and offers checking and savings accounts, a host of other savings products including money market accounts, and is a full service provider of consumer loans. It’s total consumer lending exceeds $300 billion and is made up of mortgages, credit cards, auto loans and personal loans to consumers. Customers of Wells Fargo Bank have their deposits insured by the FDIC.
2. Chase Bank
Chase Bank is the largest financial institution in the United States. The major difference between this bank and Wells Fargo is that a large percentage of Chase Bank’s business activities consists of investment banking. The bank also has over 4,000 branches in the country and offers all the traditional banking services and loan products. A major distinction between Chase Bank and other large banks is their focus on more affluent customers which is evident from the popularity of their products be it, Chase Private Client when it comes to checking accounts or the Chase Sapphire Reserve Card when it comes to credit cards. Customers of Chase Bank have their deposits insured by the FDIC.
3. Bank of America
To some degree because of its name, Bank of America is one of the most well known brands in banking in the country. It is also one of the largest providers of consumer banking services. This is evident from the fact that the bank has more than 30 million consumer checking accounts and over $1 trillion of consumer deposits. The bank has approximately 4,000 branches in the United States and over 15,000 Bank of America-branded ATMs. Customers of Bank of America have their deposits insured by the FDIC.
Like with anything in financial services, it is very important to do your own research and to carefully evaluate the options available to you before choosing a bank. While it might seem there’s no downside to opening a checking account at a given bank, keep in mind that banks charge fees for closing accounts, and charge consumer fees if they don’t use opened accounts. So, it’s generally not a good idea to open an account because of a sign-on bonus for example if you don’t plan to use the account.
Read also: How to Check Your Bank Balance Online