Large banks, community banks, and credit unions are the three types of financial institutions in the United States. Large banks are typically those with total assets of $500 million or more. Community banks are typically smaller, with assets of less than $500 million. Credit unions, on the other hand, are unique. A credit union is a financial institution that its members own due to a cooperative arrangement. It is normal for them to have around the same total assets as community banks, with 75% claiming assets of less than $100 million. However, the number of their assets might vary greatly.
Advantages of Big Banks
Potential Convenience
The big national banks with famous names dominate the major cities and even extend their reach to smaller markets. If you are interested in personal financial services, a local bank with branches close by could be a good alternative. They can provide customers with one-stop shopping, allowing customers to access several services from the same institution. For instance, you could be able to utilize only one log-in to access your savings and checking account, your credit card, and your loans. Large banks with nationwide reach are Bank of America, Capital One, Chase Bank, Wells Fargo, and many other big institutions.
Sometimes Frustrating
The big banks usually have rigid procedures and systems that make managing them challenging. If you require customer support or customer service assistance, you could be forced to dial a national toll-free number even though you're familiar with and trust local bankers. You might have to talk to a few new employees or be asked a series of questions from the fraud department to establish an account. Compare that to a bank in your neighborhood, and the same employee will handle all your needs in one go.
Costs Vary
Checking free accounts is becoming increasingly difficult at the big banks. You are usually eligible for fee-free accounts by having enough cash in your account or creating direct deposits; however, truly free accounts are scarce. There are occasions when you can locate fee-free business checking accounts at national banks, whereas local banks have small charges.
Advantages of Local Banks
Personal service
Many smaller banks, community-based banks, and credit unions provide superior customer service than larger institutions. It's easier to get an individual touch in a smaller environment. Bankers could recognize your name and face, and this level of care will make you feel more secure in putting your money with the bank.
Community-based
Smaller banks could be the financial hubs of communities in the area. They take responsibility for the financial well-being of residents in the area and strive to improve their customers. For instance, community banks can provide certain small-scale business loans to those who wish to establish businesses in the neighborhood and help to boost the local economy.
Negotiate
Large banks have financial services with interest rates and fees set all over the board. There's not much room for wiggle room. Community banks are more likely to collaborate with clients on a case-by-case basis to determine what they can do to provide the customer with a service.
Alternatives to Big Banks
Large banks don't have to be bad, and smaller banks and credit unions aren't always the best alternative. Every person has different requirements in banking, such as having access to service in person and a large array of ATMs across the world or even knowing every person by name at your local branch. Examine the strengths and weaknesses of all the options available to discover the one that is the best match for your needs.
If you're struggling to make ends meet or are an income-constrained person, a credit union may be able to provide you with more favorable terms on loans, no-cost banks, or more individualized services. There are also credit unions designed for certain groups like teachers, military personnel, family members, and government employees. These credit unions provide benefits you won't get from a national bank.
Should You Bank With a Community Bank?
Banks locally through a local lender rather than a large bank have many advantages. From the personalization of your banking experience and the positive impact that the bank has on the local community to the lower cost of fees and greater chances of approval of loans, community banks are more competitive than larger banks on all accounts.
If you're seeking specifically tailored financial solutions, it is possible to choose a larger bank. Community banks can provide many options like their bigger counterparts, including online and mobile banking - larger banks can effectively provide every type of financial service or product.
Suppose you're planning to establish your first account. In that case, you can apply for an unsecured business loan, get an investment property mortgage, or change the bank you use because you're unhappy with the bank you are currently with; if you are looking to switch banks, why not visit the community banks in your area and explore what they can provide?
