On to my actual question- does anyone have a suggestion what would be a good bank to switch over to? I understand that I would have to go through a lot of headache changing out automatic payments and direct deposit and everything, but I feel at this point that my current bank is starting to not be worth the trouble. I have looked a bit into online banking but I'm not familiar enough with the landscape to know what to look for in them. I figured this would be just eh community to ask, and any advice would be greatly appreciated ^_^
You need to look at a couple of things in your personal situation:
1) Do you need a local branch? Online banks often offer low no-fee, higher-interest accounts for people who rarely need services that have to be done in person (getting documents notarized, cashier's checks, large cash/coin deposits, cash withdrawals in denominations that ATMs don't stock, etc.). The potential downside with these banks is that you're dealing with a remote call center if anything goes wrong, and you may find yourself out of luck if you do need a cashier's check right away or something else of that nature. I have had uniformly good service with Capitol One 360 and do most of my transactions through there, but I still maintain an additional account at a physical bank.
2) Credit union, local for-profit bank, or large national institution? Credit unions like to sell a warm, fuzzy image of local control, greater customer service, etc. That stuff feels nice, but what you really need to look for is who is going to give you the best deal for the services you need. Oftentimes this will be a credit union, especially for people without a large amount of assets deposited with the institution. The big guys tend to charge monthly fees for less-savvy consumers, but I have found that their array of services is often better than a credit union when your assets increase past a certain level.
Let's compare a few representative options:
Capital One 360 (online bank): No monthly fees, free bill pay, large network of no-fee ATMs, 0.75% APY on savings and 0.2% APY on checking, no physical branches. I use this service as my primary bank account and generally recommend it for anyone who can do most of their banking electronically.
BECU (popular credit union in the Seattle area): No monthly fees, large network of no-fee ATMs, 0.1% APY on savings and 0.05% APY on checking, with bonus interest rates on the first $500 in checking and savings if you jump through certain hoops (this bonus rate amounts to $20 per account per year -- nothing to sneeze at, but also not very significant in the grand scheme of things). They have a very limited number of full-service branches and a larger number of limited-service "neighborhood financial centers." I looked into them because the concept of a credit union appeals to me, but the warm fuzzy feelings never overcame the combination of low interest rates and limited services that the credit union offered. That said, this can be a good option for someone with limited assets, simple needs, and a desire for a physical branch and no monthly fees.
Peoples Bank (smaller bank in Washington state with only a few branches): No monthly fees for a basic checking account, savings account fees waived with balance over $250, free bill pay, decent selection of fee-free ATMs, 0.15% APY on savings and no interest on checking. The overall package here looks pretty similar to the credit union. It's another situation where you're letting them hold on to your money for basically nothing, but you're not directly paying them anything for their services either.
Wells Fargo (large national bank): No truly free checking option. The lowest tier has a $7 monthly fee that can be waived if you have $500 in monthly direct deposits or your balance never dips below $1,500. Lots of Wells Fargo ATMs available, but they'll charge you $2.50 every time you use an ATM owned by someone else (in addition to any fee the ATM owner charges). There's also a $3/month fee for online bill pay, and plenty of other fees for other services. On top of all that, the lowest tier of savings accounts pays a laughable 0.01% interest and the checking account pays no interest at all. Probably not the best option for most people.
That said, once you have saved $50k to put in a brokerage account and/or IRA, you qualify for the PMA package that gives some nice benefits. If you have that level of assets with Wells Fargo, there are no monthly checking or savings account fees, online bill pay becomes free, the interest rates go up slightly (0.08-0.1% for savings and 0.01-0.1% for checking), the $2.50 non-Wells Fargo ATM fee goes away for the first two withdrawals each month, fees for other things (like cashier's checks, money orders, check images, basic check printing, and more) also go away, you get preferential interest rates and fee waivers on loans, and more. They used to offer 100 free trades each year for brokerage account customers (which was a pretty great deal that I have grandfathered in on my account), but that benefit has since been replaced by the less-compelling offer of unlimited $6.95 trades for new customers.
You'll find most of the big banks have a similar system in place: they'll soak the people with lower assets who can't consistently jump through the hoops they set for monthly fee waivers, while offering pretty nice levels of service for those who have managed to save more money. Credit unions have a more egalitarian strategy: they give everybody a basic level of service for free, but putting larger sums of money into their care scores you few bonus points.
