Business Insider’s Methodology for Evaluating Bank Accounts

Understanding Bank Account Ratings: A Comprehensive Guide

Navigating the world of banking can be daunting, especially when it comes to choosing the right account for your financial needs. With a plethora of options available, understanding how different bank accounts are rated can help you make informed decisions. This guide delves into the intricacies of bank account ratings, focusing on various account types, their features, and how they are evaluated.

Overview of Bank Account Ratings

At Business Insider, bank accounts are rated on a scale from one to five stars, based on a comprehensive evaluation of various features. The ratings are designed to help consumers quickly identify which accounts may best suit their needs. Each feature is rated from 0 to 5, and a weighted average is calculated to determine the overall star rating.

As of December 2024, the rating system has been refined to consider more features, including security and miscellaneous perks or disadvantages. This change reflects the evolving landscape of banking, particularly with the rise of fintech companies and non-traditional banking platforms.

Checking Accounts

Checking accounts are fundamental for managing daily finances. They typically do not earn interest but provide essential features like debit cards and check-writing capabilities. The evaluation criteria for checking accounts include:

Monthly Fees (20% of rating): Accounts with no monthly fees receive the highest ratings. Those with fees that can be easily waived score better than those with difficult-to-waive fees.
Overdraft Protection Options (15% of rating): Accounts that offer multiple free overdraft protection options score higher than those that charge fees for overdrafts or deny transactions outright.
Minimum Deposit (10% of rating): Accounts requiring a low minimum deposit are rated more favorably.
ATM Network/Fees (10% of rating): A robust ATM network with no out-of-network fees earns higher ratings.
Customer Support (10% of rating): Institutions offering 24/7 support receive the best ratings.
Mobile App (10% of rating): Ratings are based on user feedback from app stores.
Ethics (10% of rating): Institutions with recent scandals or low BBB ratings are rated lower.
Security (10% of rating): Banks with strong financial ratings and no recent data breaches score higher.
Miscellaneous Features (5% of rating): Unique perks or limitations can influence the overall rating.

Savings Accounts

Savings accounts are designed for earning interest on deposits. They typically do not offer checks or debit cards but allow for easy transfers to other accounts. The evaluation criteria for savings accounts include:

Interest Rate (25% of rating): Competitive rates compared to national averages are crucial for high ratings.
Monthly Fees (20% of rating): Accounts with no fees score highest.
Minimum Deposit (10% of rating): Lower minimum deposits are preferred.
Customer Support (10% of rating): Availability and accessibility of support are key factors.
Mobile App (10% of rating): User ratings from app stores are considered.
Ethics (10% of rating): Recent controversies can negatively impact ratings.
Security (10% of rating): Financial performance and data breach history are evaluated.
Miscellaneous Features (5% of rating): Unique account features can enhance the overall rating.

Certificates of Deposit (CDs)

CDs are fixed-interest accounts that require funds to be locked in for a specified term. They often offer higher interest rates than regular savings accounts. The evaluation criteria for CDs include:

Interest Rate (20% of rating): Higher rates than national averages are essential.
Early Withdrawal Penalties (20% of rating): Lower penalties for early withdrawal improve ratings.
Variety of Term Options (10% of rating): A range of terms, including specialty CDs, can enhance ratings.
Customer Support (10% of rating): Availability of support is crucial.
Mobile App (10% of rating): User ratings from app stores are considered.
Ethics (10% of rating): Recent controversies can negatively impact ratings.
Security (10% of rating): Financial performance and data breach history are evaluated.
Minimum Deposit (5% of rating): Lower minimum deposits are preferred.
Miscellaneous Features (5% of rating): Unique account features can enhance the overall rating.

Money Market Accounts

Money market accounts combine features of checking and savings accounts, often offering tiered interest rates and check-writing capabilities. The evaluation criteria for money market accounts include:

Interest Rate (20% of rating): Competitive rates compared to national averages are crucial.
Monthly Fees (20% of rating): Accounts with no fees score highest.
Customer Support (10% of rating): Availability and accessibility of support are key factors.
Mobile App (10% of rating): User ratings from app stores are considered.
Ethics (10% of rating): Recent controversies can negatively impact ratings.
Security (10% of rating): Financial performance and data breach history are evaluated.
ATM Network/Fees (5% of rating): A robust ATM network with no out-of-network fees earns higher ratings.
Minimum Deposit (5% of rating): Lower minimum deposits are preferred.
Access to Your Money (5% of rating): Multiple access methods enhance ratings.
Miscellaneous Features (5% of rating): Unique account features can enhance the overall rating.

Hybrid Bank Accounts

Hybrid accounts blend features of checking and savings accounts, often offered by fintech companies. The evaluation criteria for hybrid accounts include:

Monthly Fees (20% of rating): Accounts with no fees score highest.
Interest Rate (15% of rating): Competitive rates compared to national averages are crucial.
Overdraft Protection Options (15% of rating): Multiple free overdraft protection options score higher.
Minimum Deposit (7.5% of rating): Lower minimum deposits are preferred.
ATM Network/Fees (7.5% of rating): A robust ATM network with no out-of-network fees earns higher ratings.
Customer Support (7.5% of rating): Availability and accessibility of support are key factors.
Mobile App (7.5% of rating): User ratings from app stores are considered.
Ethics (7.5% of rating): Recent controversies can negatively impact ratings.
Security (7.5% of rating): Financial performance and data breach history are evaluated.
Miscellaneous Features (5% of rating): Unique account features can enhance the overall rating.

Business Checking Accounts

Business checking accounts are tailored for managing business finances. The evaluation criteria for business checking accounts include:

Monthly Fees (20% of rating): Accounts with no fees score highest.
ATM Network/Fees (10% of rating): A robust ATM network with no out-of-network fees earns higher ratings.
Customer Support (10% of rating): Availability and accessibility of support are key factors.
Mobile App (10% of rating): User ratings from app stores are considered.
Ethics (10% of rating): Recent controversies can negatively impact ratings.
Security (10% of rating): Financial performance and data breach history are evaluated.
Minimum Deposit (5% of rating): Lower minimum deposits are preferred.
Transaction Limit (5% of rating): Higher limits on transactions improve ratings.
Miscellaneous Features (5% of rating): Unique account features can enhance the overall rating.

Understanding these rating criteria can empower consumers to make informed decisions when selecting bank accounts that align with their financial goals. Whether you’re looking for a checking account for daily expenses or a high-yield savings account to grow your savings, knowing what to look for can lead to better financial outcomes.