(MONEY Magazine) – Remember when you got a toaster for opening a checking account at your neighborhood bank? Well, things have changed: Today when you open an account at the typical bank you get toasted. Since 1985, fees on deposit accounts have risen some 112%, three times faster than the inflation rate. And service fees? Some banks, including First Chicago and Wells Fargo, now actually charge customers when they deal with a human, rather than an automated teller. And while the average bank pulls in record profits, the average customer's savings account garners a measly 2.3% interest. That means it would take you a year to earn enough interest on a $1,000 deposit to buy a toaster.

Of course, a great number of banks have resisted the industry's trend of charring its customers. But after surveying banks around the country, Money has discovered that one in particular deserves to be called the best bank in America. It outshone 427 other institutions in a battery of comparisons ranging from CD rates to checking fees to business hours. And our champ is (drumroll, please): USAA Federal Savings, a $4.8 billion savings and loan in San Antonio. By our measures, USAA's combination of safety, generous savings rates, minimal fees, unparalleled convenience and five-star service beats the dividends off the competition. (The best banks in each state are listed in the table on page 129.)

Here are just some of the elements we like about USAA:

ROCK-SOLID SAFETY. Sure, the Federal Deposit Insurance Corporation promises to protect your money for as much as $100,000 if your bank fails, but who wants to be bailed out by the feds? Warren Heller, director of research for Veribanc, a financial institution safety rating firm based in Wakefield, Mass., judges USAA Federal's chances of failing "slim to none." Heller has awarded the 12-year-old S&L his company's top safety rating for thrifts (green with three stars) for each quarter of the past five years.

FREE CHECKING REGARDLESS OF YOUR BALANCE. Fewer than one in four banks (23%) match USAA's truly free checking account, which comes with no monthly maintenance fee, no per-check fee and no minimum balance. The typical bank nails you with monthly fees of $3 to $10, plus 10¢ to 50¢ per check when your balance falls below $300 to $1,000. At USAA, if you keep your checking balance above $1,000, the thrift pays you interest of 2.78%.

THE NATION'S BEST CREDIT-CARD DEALS. USAA's standard and gold Visas and MasterCards have ranked among the nation's best no-annual-fee credit cards for more than two years (see Your Money Monitor on page 44). The rate of all four cards (13.04%, as of May 1) is well below the national average (18%). "There simply isn't a card issuer that offers a better deal on an ongoing basis," says Robert McKinley, president of RAM Research, a credit-card data and consulting firm.

FIVE FREE MONTHLY WITHDRAWALS FROM ANY ATM. Most banks (87%) will allow you free withdrawals from any automated teller machine--as long as it's one of their own. Eight in 10 charge 10¢ to $2 each time you use an ATM that belongs to another bank. USAA is no angel in this category, but at least it allows you five free withdrawals a month from any ATM before tagging you with a $1- per-withdrawal fee. (That provision applies to any of the 200,000 ATMs worldwide that are part of Cirrus, one of the nation's biggest networks.)

GENEROUS YIELDS ON CDS AND SAVINGS ACCOUNTS. All of USAA's nine retail CDs offer above-average yields. Its one-year CD, for instance, recently yielded 6.22%, more than half a point better than the national average. As for savings accounts, a $50 stake gets you an interest rate of 3.56%-nearly 60% more than the average bank's savings account. Stash away at least $1,000, and USAA raises your rate to 4.94%. For a $5,000 minimum, you'll earn 5.51%, which is on par with the nation's highest-yielding money-market accounts.

CONVENIENT BANKING BY PHONE OR COMPUTER. Like about half of all banks, USAA allows customers to do at least some of their banking by Touch-Tone telephone. But USAA is among the few (fewer than 5%) whose customers can also use their personal computers to pay bills, access account information and transfer funds from one account to another ($14.95 for the start-up software, plus as much as $7.95 for a month's worth of transactions).

BARGAIN CAR LOANS AND MORTGAGES. USAA's car loans (9% to 9.5%) and jumbo mortgages (8.1% to 8.4% APR for loans of $203,150 or more) cost about 5% less than the national average. The savings can add up: A homeowner who chose USAA's 30-year fixed-rate mortgage (8.44% APR) over a comparable mortgage at the national average rate of 8.81% APR would save about $20,000 in interest payments over the life of a $205,000 loan.

EVERYONE'S WELCOME. In addition to all these classy features, USAA Federal has one that makes it truly user-friendly: You can bank there even if you live nowhere near San Antonio. While a few local residents bank in person at the thrift's headquarters, the bank deals with virtually all of its 142,365 deposit-account customers by phone and mail. So unless you live in Pennsylvania (where state law prohibits companies from offering both insurance and bank accounts to new customers), you can order a CD or a car loan from USAA Federal as easily as you would order hiking boots from L.L. Bean.

Douglas Billingsly, a 24-year-old engineering company administrator in Springfield, Va., is a typical satisfied USAA customer. When he needed a $13,000 used-car loan last July, Billingsly thought he was stuck with a local dealer's offer of 13% until he took his father's advice and telephoned USAA. "I called on Friday," he says. "They offered me super terms [9%] and approved me over the phone. The check arrived by Federal Express the next day."

Where has this banking gem been hiding all your life? Its parent, the USAA Corp., began operations in 1922 as the United Services Automobile Association, a car insurance company that sold policies to former and current military officers and their families. (Today, only the corporation's property and casualty insurance policies are restricted to that customer base.) Since military personnel tend to be transferred frequently, the company did without conventional sales agents and conducted all its business by mail (they opened their toll-free customer telephone lines in 1977).

In the years since, the company has kept to that approach, even as it expanded into no-load mutual funds, annuities, life insurance, discount brokerage--and, of course, banking. USAA Federal's 370 phone reps (32% of the thrift's work force) answer more than 30,000 calls a day on the thrift's 150 toll-free numbers. And don't worry that the company can't afford to sustain this level of service. Last year, the thrift's return on its $4.8 billion of assets was 2.36%, double that of the average bank. A portion of its profits are reinvested into USAA Federal's insurance company parent and distributed to policyholders in the form of dividends.

Nevertheless, USAA Federal's unique nationwide reach was not a factor in our ranking. We scored all 428 banks and thrifts in our survey strictly on the attractiveness of their consumer accounts and services, awarding the most to banks with high-yielding money- market and savings accounts (which counted for 12% of the total score); low-cost checking accounts (12%); a 24-hour telephone line manned by live phone reps (12%); low fees for services like money orders and bounced checks (12%); access to ATMs that are part of a nationwide network (12%); high yields and low minimum investment requirements on a one-year CD (10%); weekend or evening banking hours (12%); home banking by computer or screen phone (10%); and the availability of home-equity loans (5%) for banks everywhere but Texas, where state law prohibits them. (To judge your own bank, see the box above.)

We also rated each institution's willingness to lend to its customers by comparing the total dollar amount loaned in 1995 with the number of deposit accounts (5%). Then we added up the scores, awarding the top scorer in each state a place on our honor roll (page 129).

But even if USAA's remote-banking approach didn't figure into the scoring, it certainly has helped the bank serve its customers better. For one thing, it keeps things inexpensive. "We can offer customers low prices because we don't have to spend a lot on marketing or brick and mortar," says USAA Federal president Jack Antonini. In fact, USAA's operating expenses (as a percentage of revenues) are 40% lower than the average bank's, according to IDC Financial Publishing.

USAA's bank-from-afar approach also has forced the bank to find new ways to provide traditional services in order to keep customers from drifting to their neighborhood bank. How do you make a deposit? Most USAA customers have their paychecks or Social Security benefits deposited directly into their accounts. But they can also deposit checks by mail using the thrift's free postage-paid envelopes. Similarly, customers can apply for any of USAA's loans over the phone (800-531-0520). While you wait, the phone rep calls up a copy of your credit report from one of the major credit bureaus on a computer screen. Most borrowers can obtain their approval in less than 15 minutes. "People who are comfortable with technology find our bank extremely convenient," boasts Antonini.

Of course, many people still prefer the face-to-face encounter with a friendly teller even if they have to pay for the privilege. But their ranks are dwindling. "If you have no qualms about keeping some of your savings at a mutual fund that's thousands of miles away, then mail-order banking isn't much of a stretch," says Richard DeMong, professor at the University of Virginia's McIntire School of Commerce. "You can't touch Vanguard or Janus, so why should you care if you can't touch your bank?"