Local Banks vs Big Banks: What's more beneficial?

Local Banks vs Big Banks: What's more beneficial?

It's vital to pick a bank that offers the goods, services, and rates you require. You might ask if the size of an institution matters when comparing giant national banks to local banks and credit unions. It does to some extent, although both large and small banks can provide essential services such as checking and savings accounts. Here's what to consider as you compare banks:


Select a bank that will work with you on your terms. If you prefer to bank in person, some institutions in your area may have a more substantial presence than others.


Determine your banking requirements and evaluate the costs of the services you require. Smaller colleges frequently have lower fees; however, this is not always the case. According to a study issued by the Consumer Financial Protection Bureau in December 2021, overdraft and non-sufficient funds fees at local banks and credit unions were 13 percent to 19 percent lower than at major banks.


Small businesses can have a surprising number of products and services to offer. However, there are instances when you require the power of a megabank.


Banking with a local institution supports your community's economy while also potentially simplifying your banking experience. However, there are always advantages and disadvantages. Let's look at the distinctions between big banks and community banks.

Megabanks Have a National Presence

Potential Convenience

Large national banks with well-known brands rule significant cities, and they even have a presence in smaller areas. If you like face-to-face banking, a bank with branches nearby can be a good choice. They may be able to provide one-stop shopping, allowing you to receive various services from the same place. For example, you may be able to log into your bank and savings accounts, credit cards, and loans using the same login. Bank of America, Capital One, Chase Bank, Wells Fargo, and several other significant banks have a nationwide presence.

Sometimes Frustrating

Dealing with big banks is typically challenging due to their inflexible systems and processes. You may have to meet with recent hires or answer many fraud department questions to open an account. Compare that to a local bank, where the same individual may handle all of your needs in one sitting. Even if you know and trust your local bankers, you may be obliged to call a nationwide toll-free number if you need customer assistance.

Costs Vary

At megabanks, free checking is becoming increasingly difficult to come by. Fee exemptions are usually available if you retain enough money in your account or set up direct deposit, but free accounts are uncommon. National banks occasionally offer fee-free business checking, but local banks incur minimal costs.

Banks in the Community Participate

Community banks and local credit unions are ideal for most banking needs. They may be small, but that doesn't mean they can't suit your demands. Some institutions offer a limited range of services, while others outsource services, and still, others supply everything you require in-house.

Competitive Fees and Rates

Local banks are frequently a solid pick for free checking accounts, which is the account you'll most likely require. Some banks give everyone free checking, while others remove fees if you agree to receive electronic statements. They also compete with low-interest savings and loan accounts. Although online banks may provide better savings rates, nothing is stopping you from having multiple accounts (online and local).

Local Knowledge

Local banks may make transactions easier because they are involved in local affairs. This is especially true if you require financial assistance. Megabanks, for example, may be hesitant to fund your local business, investment property, or agriculture loan, whereas local banks are familiar with analyzing loans in your area.

Personal Service

For better or worse, local banks tend to provide more personalized service than large banks. Working with the same person over time is not uncommon. Staff at the bank can also learn about your needs and make recommendations for bank products that may be beneficial. You form relationships and learn what to expect and who to contact if you have questions. You lose the privacy that comes with being a big bank customer simultaneously. If you reside in a very tiny town, you may wish to keep a low profile.

Offerings Vary

While local banks and credit unions can provide a wide range of services, including checking accounts, merchant accounts, and asset management, some organizations specialize in meeting fundamental customer requirements. You'll need to search elsewhere if your favorite local bank doesn't handle business accounts and you start freelancing.

Community Involvement

Local banks and credit unions are important contributors to the community's economy, and they frequently give back. You're likely to notice a local institution's logo at charity races and other events, indicating that they gave money or other resources to help make the event a success. Your financial needs should dictate your bank selection, although working with a local institution may provide a sense of satisfaction.

Don't Ignore Credit Unions

Check out local credit unions, which are not-for-profit customer-owned financial institutions, as you look into banks. Credit unions can often provide the same products and services as community banks and large banks, and they exist (hopefully) to serve their members. Even if you choose a tiny credit union, you may be able to use a shared branching network to gain access to thousands of other credit union branches and ATMs around the country.

Frequently Asked Questions (FAQs)

How do you find local banks?

Keeping an eye out in your neighborhood is one approach to locating local banks. Even if you don't see a bank branch, local banks frequently sponsor community events and display advertisements around the community, so simply living in your neighborhood may lead you to the bank you're searching for. Numerous websites can assist you in searching for community banking services (such as this one run by the Independent Community Bankers of America).

What's the difference between a bank and a credit union?

The main distinction between banks and credit unions is that a credit union is a nonprofit organization its members own. 3 A bank, like any other business, wants to profit from its operations. Investors and shareholders own it. This difference is the source of all other discrepancies, such as the lower interest rates on bank account deposits.

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