Do all banks seem the same? If so, you might want to take a closer look. After all, there are more than 10,000 banks in the U.S. alone, and each one offers its own unique set of services, branch locations, account fees, interest rates, and more.
Despite the vast number of options, the majority of people give their business to just a few dozen megabanks. But when you default to one of these large financial institutions, you could be missing out on major perks, like high interest rates on your deposits, low fees, personalized services, and more.
Given the sheer volume of options, how can you choose where to take your money? One way to narrow it down is to understand the different types of banks and what each one does.
A central bank isn’t the kind of bank where you can become a customer, but these institutions are important nonetheless. Central banks help regulate national economies by making policies that impact the money supply and the cost of borrowing.
In the U.S., the central bank is the Federal Reserve. It’s made up of 12 separate Federal Reserve Banks located around the country. Some of the most crucial functions they perform include lending money to other banks and enforcing consumer protection laws.
When you think about the big banks you’re most familiar with, they’re likely commercial banks. For example, JPMorgan Chase, Wells Fargo, Bank of America, and Citibank are four of the largest commercial banks in the U.S. These banks’ main obligation is to make money for their shareholders.
Commercial banks offer bank accounts and loans for individual customers, as well as for small and medium-sized businesses. These banks are convenient options for your day-to-day banking needs, since they tend to give you a variety of ways to deposit, withdraw, and transfer money, including in-person, online, or via apps.
However, if you’re looking for the lowest banking fees or highest interest rates on your savings and CD deposits, you’ll probably want to try an online bank, a smaller bank, or a credit union.
National banks are a type of commercial bank. These large institutions are regulated by the federal government, but they can operate in any state. Many of them are recognizable because they have the word national in their names, such as 1st National Bank, Old National Bank, and Peoples National Bank.
Read more: These are the 20 biggest banks in the U.S.
Regional banks are banks that have $10 billion to $100 billion in assets. That might sound like a lot of money, but by comparison, Bank of America manages over $2.5 trillion.
Regional banks often operate across several states, with nationwide or even global ATM networks. They also offer all the same services as large, national banks, but tend to have more ties to their communities, including through charitable giving and local volunteer work.
A regional bank can be a good choice if you want your money to go back into your community, or if you want better rates on your deposits and loans than you would get from a larger bank.
A community bank is a bank that has less than $10 billion in assets. Community banks usually have all of their branches located in a limited geographic area, such as a county or town, and they often offer services tailored to people who live in the area.
Their technology might not be top-of-the-line when compared to some big banks, but most community banks have the main services you need as a customer, such as banking apps and mobile check deposit.
A community bank might be hard to find in your area, since their overall numbers have been shrinking in recent years. But they’re still a good option if you want a more personalized, face-to-face experience than you get from a major bank.
Community banks can also be a good choice for people with no credit or bad credit since some are more flexible with loan qualifications than big banks. Additionally, they often specialize in small business loans.
Investment banks primarily work with big businesses and corporations. If you own a business, one of these banks can potentially serve you in several ways, including helping you invest money and securing capital for you in exchange for equity.
However, you’ll likely need to go elsewhere for your everyday business banking needs, as investment banks don’t usually offer products like checking accounts. They also tend to charge higher fees than commercial banks.
Online banks, also known as digital banks, only offer their services online and via banking apps. While you can potentially access your online-only bank account through an ATM, online banks don’t have physical branches where you can go to do things like deposit and withdraw cash.
Some of the larger online banks you may have heard of include:
Because online-only banks don’t have physical locations, their overhead costs are lower than other types of banks. This allows them to pass on their savings to customers in the form of high rates on deposit accounts, competitive low rates on loans, and low banking fees.
If you’re comfortable managing your money almost exclusively online (or just going altogether cashless) an online bank can be a lucrative choice. Online-only banks are also useful if you live in a rural area where there are no banks nearby, assuming you have an internet connection.
Neobanks aren’t technically banks — they’re financial technology (fintech) companies that offer banking services in partnership with chartered, FDIC-insured banks.
Like online banks, neobanks offer digital-only services with an emphasis on tech-forward innovations and enhanced user experience. They also have relatively low fees. However, neobanks typically offer a small range of core banking products, such as standard checking and savings accounts and high-yield savings accounts.
Neobanks can be attractive options for people who struggle to qualify for a bank account or credit card since they often have flexible requirements to qualify, and they offer products to help with entry to banking. For example, Chime offers both a secured credit card and a second-chance bank account.
Read more: The 5 best neobanks and fintech companies of 2025
9. Savings and loan association
Savings and loan associations (S&Ls), also called savings banks or thrifts, offer basic banking services, but they cater primarily to individuals (not businesses) who need the following products:
Mortgage loans
Savings accounts
You can recognize a savings and loan association by its name: They either end in the letters SSB (for state savings bank) or FSB (federal savings bank).
In 2025, there are just under 250 active federal savings banks in the U.S. These banks can either be cooperative, meaning the customers are also members who own the bank, or corporate, meaning shareholders are the owners.
Banks and credit unions are both financial institutions. They offer many of the same services, but they do have key differences.
While banks are for-profit businesses owned by private investors, credit unions are nonprofits owned by their members. As a result, credit unions are usually able to offer lower account fees and interest rates on loans, as well as high interest rates on deposits.
Credit unions also have more products meant to help people who are struggling financially, such as Payday Alternative Loans.
One of the potential drawbacks of credit unions, however, is that they require you to meet certain qualifications for membership. For example, you or a family member who’s already part of the credit union may have to live in a certain geographic area or work in a specific industry.
Read more: 7 credit unions anyone can join
As you can see, you have a variety of options when it comes to where you bank. To pinpoint the best bank for you, ask yourself these questions:
What’s available in your area?
Do you prefer digital or in-person banking?
What products and services do you need right away and over the next few years?
Do you want a bank that invests in the community?
Are high deposit rates and low loan rates your main priority?
Do you need a bank that works with bad credit or negative banking history?
For credit unions, do you meet their membership requirements?
Depending on your answers, you may find that the best type of bank isn’t necessarily the big national banks you see on every other corner. For many consumers, your needs will be better met by a smaller institution that offers competitive interest rates with robust online services and easily accessible ATMs.
Read more: Guide to choosing a bank for the average consumer
