Out of the eight “least-evil” banks, as ranked by a staff reporter for CNN Money, I am a customer of two. Everyone who makes financial transactions of a regular basis or handles money in any form should have a checking and savings account at a solid bank that doesn’t attempt to charge its customers exorbitant fees. Although free banking is slowly becoming extinct and there is a good chance that choices for free accounts will become more limited in the next few years, you can still find a good banking institution to work with now, even if that might be a credit union.
Here are CNN Money’s picks, with some of my thoughts.
1. Ally Bank. Last year, Kiplinger’s Personal Finance magazine declared Ally Bank as the the institution offering the best savings account. I’ve had accounts at this bank since May 2009, and I have not yet come across a problem. Ally was originally GMAC Bank, but the parent company, General Motors, undertook a major rebranding campaign that put Ally Bank in the spotlight. Open a High Yield Savings Account at Ally Bank.
2. ING Direct. There is nothing I can say about ING Direct that hasn’t been said. It is the gold standard of online savings banks. I’ve had accounts here for almost a decade, and my accounts include the Orange Savings Account, Electric Orange Checking with free bill-pay, and Business Savings. When I had a paycheck for direct deposit, the Electric Orange Checking served as the gateway to my savings. Now, most of my income is delivered directly to my business savings account at ING Direct. (Ed. note: ING Direct became Capital One 360 in 2013.)
I have limited experience with the remaining six accounts listed by CNN Money. If you have any thoughts on the evilness of these banks, let us know by writing about them in the comments below. For the rest of CNN Money’s picks, continue reading this article.
3. USAA. CNN likes USAA’s free checking account and notes that the account isn’t just for military families anymore. I’ve heard countless positive reviews from readers about USAA, I will likely join later this year to share a more in-depth review.
4. Capital One. I know Capital One mainly as a credit card issuer, but the parent company merged with North Fork Bank, taking over those branches in New Jersey and New York. Again, CNN Money points out the free checking account makes this bank worthwhile. The article warns that the bank charges a $2 fee for using other banks’ ATMs — when the bank that owns that ATM will also likely charge a fee. If you have a convenient branch, however, this might be a good option to consider.
5. Alliant Credit Union. In our upcoming podcast interview with Liz Weston, we discuss credit unions and their advantages over banks. Although this credit union is based in Illinois, anyone can join. There are plenty of fee-free ATMs that communicate with this account throughout the country. If you live in Illinois or are satisfied with the lack of a local branch, CNN recommends this credit union.
6. PNC. PNC has many branches in the area where I live, and many of my friends have accounts here. Like the others listed, PNC offers free checking. If you need to use another bank’s ATM with your PNC account, the bank will reimburse any fees you pay the ATM’s owner, as long as you maintain a minimum balance of $2,000 in your account. That might turn some customers away, but I wish this feature of ATM fee reimbursement were more popular.
7. The Incredible Bank. This is the first I’ve heard of this Internet-only bank. It offers a higher interest rate than most other online banks, but I am wary of banks that show up out of nowhere, offering a rate that other banks can’t touch, in order to attract a flood of customers. Every time I’ve seen this happen, the bank has, after a while, dropped its rates to a more reasonable level, and have usually become non-competitive with other, more established banks. Incredible Bank doesn’t really come out of nowhere; it is the online branch of River Valley Bank. It’s been common lately for traditional brick-and-mortar banks to develop online branches whose branding is significantly different than the parent company’s.
8. Charles Schwab Bank. If you open an investing account at Charles Schwab, you will also have access to a free checking account. This is an interest-bearing account linked to your brokerage account to make buying stocks and other investments easy. Like PNC, Schwab will reimburse the fees other banks charge you for using ATMs.
I have my favorite online banks. What are yours? Do you have any experiences with the above?
Updated May 23, 2013 and originally published January 26, 2011. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.