Finding a bank with products, services, and rates that meet your needs is essential. When comparing local banks and credit unions to large national banks, you might be curious about the significance of an institution’s size. Somewhat, it does, yet huge banks and little banks can offer fundamental administrations like checking and investment accounts.
Consider these factors when comparing banks:
Convenience Pick a bank that works well with your schedule and is easy to work with. If you prefer to bank in person, some banks may have a stronger presence in your area than others.
Cost However, not all small institutions charge less in fees. For instance, the Consumer Financial Protection Bureau found that small banks and credit unions charged 13% to 19% less for overdraft and non-sufficient funds fees than large banks did. Identify your banking requirements and compare fees for the services you require.
Services A surprising number of products and services can be offered by small businesses. However, there are times when you need the power of a megabank.
Community Banking at a local bank supports the local economy and may simplify your banking experience. But there are always benefits and drawbacks.
Let’s take a deeper look at the differences between big banks and small banks.
Megabanks Have a Potentially Convenient National Reach Large, well-known national banks dominate major cities and even penetrate smaller markets. A local bank with branches might be a good choice if you value personal banking. They might be able to provide one-stop shopping, which lets you get multiple services from the same place. You might be able to use the same login for all of your loans, credit cards, and savings accounts, for instance.
Enormous banks that have a public reach incorporate Bank of America, Capital One, Pursue Bank, Wells Fargo, and numerous other huge establishments.
Occasionally Disappointing Large banks’ rigid procedures and systems make dealing with them challenging. Even though you are familiar with and rely on the bankers in your area, if you require assistance from customer service, you might be required to call a national toll-free number. To open an account, you might have to talk to new hires or answer multiple questions from the fraud department. In contrast, at a neighborhood bank, everything is handled by the same person in one sitting.
Costs Vary Megabanks are making it harder to find free checking accounts. Keeping a sufficient amount of cash in your account or setting up direct deposit typically qualify you for fee waivers, but truly free accounts are uncommon. You can sometimes find expense-free business checking at public banks, while neighborhood banks charge unobtrusive expenses.
Participating in Community Community banks and credit unions is a great choice for most banking requirements. Even though they are small, that does not mean they cannot meet your requirements. Some organizations restrict what they offer, while others outsource certain services and offer everything in-house.
Competitive Fees and Rates Local banks frequently offer free checking accounts, which you probably require the most. Some waive fees if you simply agree to receive electronic statements, while others provide standard free checking to everyone. Additionally, they compete with attractive savings accounts and loan rates. Although online banks may still offer higher savings rates, you are free to have both online and local accounts.
Knowledge of the Local Community Local banks may facilitate transactions by being involved in local issues. This is especially true when you have to borrow money. While local banks are accustomed to evaluating loans in your area, megabanks might not be willing to fund your local business, investment property, or agriculture loan.
Personal Service Local banks typically offer more personal service than large banks, for better or worse.2 It’s not uncommon to work with the same person over and over again. The staff at the bank can even learn about your requirements and recommend products that might be useful. You build relationships, know what to expect, and know who to ask questions to. You also lose the anonymity that comes with being a big bank customer at the same time. You might prefer to keep a low profile if you live in a particularly small town.
Variable Offerings While local banks and credit unions can provide everything from merchant accounts to wealth management to checking accounts, some focus on basic customer requirements. If you start working for yourself and your favorite local bank doesn’t accept business accounts, you’ll have to look elsewhere.
Community involvement Your banking needs to be the primary factor in your selection of banks, but working with a local institution may give you a sense of satisfaction. Local credit unions and banks are a part of the local economy and frequently give back. At charity races and other events, you might see the logo of a local institution, indicating that they contributed money or other resources to make the event possible.
Check for local credit unions, which are not-for-profit customer-owned financial institutions, as you explore banks. Don’t overlook credit unions. Credit unions (ideally) exist to serve their members, and they frequently provide products and services that are comparable to those offered by big banks and local banks. Through a shared branching network, you may have access to thousands of other credit union branches and ATMs nationwide, even if you choose a small credit union.
How do you locate local banks? These are some frequently asked questions (FAQs).
You can find local banks by looking around your neighborhood. Even if you don’t see a bank branch, you might find the bank you’re looking for because local banks often sponsor events in the area and advertise in the community. You can also find websites that help you find community banking services, such as this one, which is run by the Independent Community Bankers of America.
What distinguishes a credit union from a bank?
The primary distinction between credit unions and banks is that credit unions are nonprofit organizations that are owned by their members.3 On the other hand, banks aim to make money from their operations and are owned by investors and shareholders just like any other business. That difference is the source of all other differences, like the relatively lower interest rates on deposits to bank accounts.
