Which bank deserves your money?

NEW YORK (CNNMoney.com) -- Shopping for a new bank? It's nice to have a branch on every corner, but that's not the only quality that makes an institution worthy of your business.

More than half of consumers chose their bank based on a convenient location or ATM, according to a recent survey conducted by analytics company Compete.com.

"A lot of people choose their bank based on convenience, but it really does pay to shop around and find a bank that will be best for you in the long run," said Gerri Detweiler, personal finance adviser of Credit.com. "Otherwise people could be very surprised with fees that they didn't expect."

Here are a few things to consider before settling for the bank next door.

Is it safe?

It's hard to know when to trust a bank. And with the government's list of troubled banks hitting its highest level since 1992 in the first quarter, there's even less of a reason to automatically assume your money is in good hands.

But if you select a bank where your money is protected, there's no need to worry. The Federal Deposit Insurance Corporation insures each depositor up to $250,000. Depositors at insured credit unions are also covered up to $250,000 by the National Credit Union Administration.

"It's important for consumers to remember that there's no need to lie awake at night worrying about the health their bank," said Greg McBride, senior financial analyst at Bankrate.com. "If you stay within the limits of the federal deposit insurance, your money is fully protected."

To check if a bank is federally insured, you can visit the Federal Deposit Insurance Corporation's Web site.

A quick way to check on the relative safety of FDIC-insured banks is to check Bankrate.com, which provides safety ratings of up to five stars, based on an institution's capitalization, asset quality, earnings and liquidity.

Does it offer free checking?

That free checking account you sign up for may not end up being so free if your bank makes you pay other service fees.

Contrary to common belief, a free checking account doesn't always mean that there are no balance requirements and no additional charges, said Detweiler.

"You shouldn't assume that it's free," she said. "If you want a free checking account, you need to ask questions like, are there any limits on the number of checks I can write? Is there a minimum deposit? Is checking free if I enroll in direct deposit? Is there a required daily balance on the account?"

And if you plan to get a debit card as well, be sure to ask for the schedule of debit card fees before you get hit with further charges you weren't expecting, Detweiler said.

How much does it charge in ATM fees?

ATM fees might seem small, but they can accumulate to a small fortune. That's because most people don't realize that they're often being charged two fees, Detweiler said, one from the ATM your using, and another from your own bank for going outside of their network.

The average ATM surcharge was $2.22, and nearly 99% of banks imposed fees in 2009, according to a Bankrate.com study.

If you frequently use ATMs, one of the first questions you should ask a potential bank is whether it belongs to an ATM network free of fees, or if it refunds out of network ATM fees, said Detweiler.

Most lenders, and even the smaller banks, don't impose ATM fees for using their own ATMs. And many smaller banks and online banks have alliances with bigger banking networks so they don't have to charge their customers for ATM use.

"What that does is open up thousands of ATMs that their customers can access free of charge around the country and really levels the playing field between local banks and the larger banks with ATMs on every corner," said Bankrate.com's McBride.

Are its interest rates competitive?

Bank shoppers should look carefully at the interest rates paid on savings as well as the rates for loans if you plan to borrow, said Detweiler. Sites like Bankrate.com and MoneyRates.com let you compare interest rates offered by local institutions as well as Internet banks.

"Some of the best deals may be from banks you've never even heard of," said Richard Barrington, personal finance expert at MoneyRates.com. "After all, there are thousands of FDIC-insured banking institutions. With online resources, getting a list of the highest rates is so simple, there's really no reason not to compare the market leaders with your current bank."

While the average rate on a savings account is 0.2%, the highest rates listed on MoneyRates are easily several times that, said Barrington. And online banks tend to offer the most competitive rates, with many paying up to 1.29%.

"If you need local branch access for whatever reason -- maybe you get a lot of tips and make cash deposits -- you may want to have a free checking account at a local bank or credit union," McBride said.

"But if you're very comfortable banking online and want to earn the best return on your money, you may also want to have a rainy day savings fund with an online bank in another part of the country that pays a better return."