You are ready to go to college and need a checking account. You are mad at your current bank and want a change. You are new in town and need a good bank. You have started your own business and want a bank you can work with. You want to call a bank and not have to “listen carefully as our options have recently changed!” You want to walk into a bank and see a familiar face, one that actually knows your name. The reasons to start or change to a new banking relationship go on and on. You should be able to just walk into one of the 4,805 commercial banks in the United States and start that new relationship. Sounds simple to me…NOT!!!
How do you know which bank to choose? Do you go to a large corporate bank or a community bank? Now, I know they all essentially do the same thing, so what does it matter which one you do your banking with? There are pros and cons for banking at any bank. Let’s looks at a few and you can decide.
Convenience –
According to MyBankTracker, who helps consumers make smarter banking and money decisions, this is a pretty important factor when deciding on a bank. Big banks have the advantage because they have many locations, nationwide and worldwide. Some even have “sister banks” in other countries which helps if you need to use an ATM in a foreign county and don’t want the extra fees. This could be useful if you are a student traveling from home to school and various other places. On the other hand, if you are established and settled in a small town or city, a community bank may be more convenient. The bank will be well known by others in your neighborhood and will be able to provide you with friendlier customer support. Community banks tend to have lower fees on checking accounts than bigger banks, which is a great trade off.
Getting Personal –
Community banks offer more personal customer service. For example, community members sit on the board of directors of these banks and act with the community’s best interest in mind. If you or someone in the community wants to take out a mortgage to buy a house, or want a loan for a community project, there is room for conversation when it comes to fees. Big banks, on the other hand, are standard across the board and tend to be much more inflexible in terms of negotiating loan fees, overdrafts, etc.
Most big banks have cut back on providing their customers with access to bank tellers for regular transactions such as deposits and withdrawals. In evaluating which banking experience is better for you, think about your preferences. If you like interacting with machines, then the lack of face time and conversation won’t affect you much. If you enjoy talking to a real person, chatting about the weather and what is going on with your family, then a community bank is the way to go.
Deposit Rates –
Community banks, as a rule, offer higher rates on savings, certificates of deposit (CDs) and interest checking accounts. However, these rates may not be as high as online banks because they do not have to deal with the costs of operating physical branches. Community banks are also more likely to offer rewards checking accounts.
Serving Local Businesses –
If you are looking to start up a small business, the primary lenders to farmers and small businesses are community banks. This lending relationship goes all the way back to the beginning of banking in the United States. Many community banks are small businesses themselves, and as such, are more understanding of the needs of those who live in places where farms and small businesses flourish. Don’t be surprised that small business loans through community banks come with lower interest rates.
These are just some of the many aspects of banking to consider when deciding between a large or community bank. If you are not sure whether a big bank or a community bank fits your financial needs, consider trying both. When you are confident that you’ll be able to stick with one bank, then close the account at the other bank.
Just for the record, I have tried both and both have worked for me in various cases but there is nothing like walking into my favorite community bank and someone shouting out, “Well, here comes Trouble!” I love the ladies and gentlemen of The Farmers Bank.
