Question: I live in western NY, where HSBC just announced that most of its branches are closing. Our accounts will be transferred to First Niagara Bank automatically, but I want to look at other options. What kinds of things should we look at in comparing financial institutions, and how do credit unions measure up against banks? Kate, Rochester, NY
Answer: I like federally insured credit unions. The typical credit union offers its customers good service for a reasonable price. Credit unions tend to be close to their communities.
Still, it's always smart to shop around. You have a lot of choice. There are community banks, community development banks, credit unions, online-only banks, major regional banks and national behemoths.
You would think that the large banks would be the most cost effective, yet they often charge steep fees. Online-only banks often offer the best loan terms and savings rates, but the online experience doesn't work for everyone.
The key is how do you really use banking services and how much will you be charged for the services you use. A wide network of ATMs offered by large national banks may not be important to you if you don't travel much. The community bank a few blocks from where you live or work is all you need. For me, the quality of the online banking services is critical. I also want a variety of online budgeting tools.
Here are some questions to ask a potential bank or credit union: A big one is does it change a monthly fee on its checking and/or savings accounts? Do you have to maintain a minimum deposit in your accounts to avoid a fee? What is the charge for an overdraft, a bounced check, and so on. How much will checks cost you? What does the bank or credit union charge for a mortgage and auto loan? What does it credit to savings accounts and certificates of deposit?