Digital currencies and alternative payment methods are clutch in contactless scenarios or when sending money to friends over Venmo. However, you still need a traditional bank sometimes. Younger generations may be entering the formal bank scene for the first time and are determining what makes a bank worth signing up for.

Learn what to look for in a quality bank and cut through jargon in the financial wellness sector.

The Right Account for Your Purpose

You have to ask yourself what you want from a bank. Do you need a checking account, or are you looking to save for a particular item? Are you a W2 employee or a solopreneur?

First, you should understand the different kinds of banks:

• Brick-and-mortar: Traditional branch banks offer in-person service, and well-established brands offer numerous financial services, from counseling to auto and home loans.
• Online banking: These banks have no physical branches. They have a financial and environmental benefit — less overhead means more unique products and interest rates for customers with less impact on the planet.
• Credit unions: These nonprofit and member-owned banking organizations offer financial products and incentives to qualified members. They create a tight-knit community-driven experience.
• Neobanks: These differ slightly from online banks, but they are still only digital. They aren’t banks so much as they are apps or programs from financial tech companies with financial services. Some examples include Chime, Varo and Aspiration.

There is enough variety in bank account types to maximize your funds. Banks may offer some or all of these, so knowing what you’re looking for beforehand will greatly help narrow down options. Common account types include the following:

• Savings account: For money you only intend to use for a specific purpose, a savings account is best. These accounts can have no interest accumulation, or you can seek high-yield savings accounts with an interest rate. Other variants include certificates of deposit (CDs), which range in tax benefits.
• Retirement accounts: Roth IRAs or employee-sponsored 401(k)s are a few examples of accounts designed for long-term investments for different withdrawal benefits and penalties for using before retirement age.
• Checking account: These accounts are best for liquid funds you intend to access regularly or quickly for everyday purchases.

Once you know what kind of bank and account you want, you can hone your search with other criteria.

The Convenience of Proximity

Knowing what bank to use may come down to location. PNC wouldn’t be the right option if only Truist banks were in the region. Over 22% of Americans are unbanked or underbanked, and having a bank nearby could adjust those numbers.

You may want to have help close by. If you prefer in-house customer service at a branch, a credit union or traditional bank are the ways to get that. Credit unions are often more personable and make developing relationships with community members more effortless. Online banking and neobanks will have customer support, but it’s generally only available by phone.

However, online banking and neobanks offer the best proximity benefit — like carrying a bank on your phone. You can't get closer than that, but you sacrifice some of the benefits of in-person banking. Each type has pros and cons, and it depends on how much you prioritize access compared to other banking benefits.

The Game of Hidden Fees and Nonexistent Interest

Choosing a bank can come down to the terms and conditions in the account agreement, which usually explains the bank’s interest rates and fee structure on top of your account benefits. Many primary savings or checking accounts offer little to no interest, so if that’s something you’re seeking, be sure to obtain clarity with your account.

These are the most popular types of fees that might sneak into disclosures in sign-up contracts or elsewhere on the bank’s website:

• Monthly service charges for minimum balances or direct deposits
• Overdraft fees
• Out-of-network ATM fees, domestic and international
• Stop or return check payment charges
• Paper statement fees
• Same-day transfer fees
• Cashier check or wire transfer charges

Sometimes, agreements clarify how and if you can waive specific fees. For example, many banks waive monthly service charges if you keep a certain balance, and some banks reimburse out-of-network ATM charges once a month. The possibilities are vast — just read the fine print.

The account agreement will also include any insurance coverage and compliance. For example, credit unions use compliance management systems (CMSs) to help their customers stay safe. Reputable banks will disclose if the National Credit Union Administration (NCUA) or the Federal Deposit Insurance Corp (FDIC) insures them. These assist customers if a bank closes or thieves steal funds.

The Digital Revolution

Another factor in choosing the right bank is how much the institution embraces the digital financial revolution. Money management is getting more virtual — everyone knows it. So, a bank that doesn’t acknowledge the value of mobile banking, digital currencies or app functionality might turn away some prospective young customers.

Many banks nowadays have integrations with third-party apps like Zelle, Coinbase or CashApp for immediate transfers and early direct deposit. Others offer exclusive coupons for purchases made with those cards, much like credit card rewards. Almost all of them have alert notifications that users can curate and toggle.

However, embracing financial tech means the company cares about cybersecurity. Modern youth know how pervasive cyber threats are, and a bank must stay on top of it to keep customer money safe. If a company doesn’t have virtual protective measures like two-factor authentication embedded into their app or website, it’s another red flag when choosing a bank.

How Young People Bank

After knowing what you want and reading reviews, you should be able to determine what bank to use. The options are vast, but the more you know about your financial goals and what you want your banking experience to look like, the more easily you’ll be able to choose a bank.

With many banks innovating in digital realms and offering more products to customers to remain competitive, every bank will be vying for your attention — and you’ll know when you’ve found the right one.