Given that I have banked at so many different places, let’s look at some pros and cons of the different sized banks.
For the purposes of this list, big banks will be the Banks That Are (almost) Freaking Everywhere – east coast, west coast, north, south, maybe a stray ATM in the lagoon. Mid-Sized banks will be the the large regional banks that cover an entire region, like most of the southeast or most of the midwest. Small banks will encompass the smaller regional banks that mostly have locations in only one state, like just Tennessee with the stray ATM in Arkansas. And then I’ll have a tiny bank category for the local banks that cover the smallest surface area. These are the banks that only have locations in a few cities, a few counties, or just the western part of a state.
BIG BANK PROS
They are everywhere! Not only do they often have longer customer service hours, they have the most locations worldwide, which is great for travelers who like to frequently hit up the ATM. The sad thing is, a lot of people delude themselves into thinking this is a benefit for them personally and call themselves travelers when they never actually go anywhere.
The Tech – These banks are often rich in online and mobile banking features. And you can expect feature-rich ATMs as well.
They will often offer the most options for customization: This mostly covers your check card, and you will often get check card customization options for no extra charge. But there are other things, like your online dashboard, that can be customized sometimes, too.
BIG BANK CONS
They don’t care. The customer service may great when you call them, but the bank in general doesn’t need to give you anything to get you to stay because they have the convenience of being all over the country and in heavily populated areas on their side. If you leave, they’ll have three customers in your place before the end of the next hour.
Interest rates on deposit accounts are very, very low. Think about 0.01% (on average) – which translates to about two pennies a month, per $2500. Again, they have no incentive to give you anything higher. Customers stay with them because it’s convenience.
They will often have the most fees and fewest account choices. For example, Bank of America offers three different checking accounts (one of which is hidden and sucks). The student account is just their regular account with the fees waived. But Wells Fargo doesn’t even do that. They only cut the $10 fee in half for students.
MID-SIZED BANK PROS
Location. They are everywhere within the region. If you live in North Carolina, you can take a drive down to Florida and probably find an ATM.
The technology is often pretty good. About on par with a mega giant bank, complete with newer, nicer ATMs, but sometimes you get the nasty surprise of the technology being kind of wonky.
They offer more account options. And with this comes an easier way to avoid fees. It likewise increases the likelihood that you’ll be able to find an account that you actually like.
You’ll often get a booklet or more of checks for free. It’ll be the basic checks, but you’ll get some!
MID-SIZED BANK CONS
Certain features might be missing – Like customizable check cards or pricier customization.
Interest rates on deposit accounts are still terrible. The facts are, the bigger the region, the lower your rate of return. They are often little better or on par with the largest banks for the same reason – more locations means it more convenient. They don’t just have multiple locations in multiple states, they have multiple locations in your town, making it a lot more convenient to bank with them no matter where you spend most of your time.
They still don’t care much. Again, customer service is probably great, but they don’t have to bend over backwards for you. However, you’re likely to feel more valued here than you would at a bigger bank.
SMALL BANK PROS
They care a little more. It isn’t because it’s full of homegrown folks. It’s because more customers mean more money. But because they have that community mentality, they will often try to keep you happy if you threaten to leave (assuming you have any money worth mentioning in the bank.)
Interest rates might be a tiny bit higher. This isn’t because they want to give you more money. It isn’t even because they are “nicer.” It’s to get your business. And notice their buildings are often smaller than all the other banks – the bigger their buildings, the lower the interest.
It’s often a little easier to avoid fees. Again, they want to give you an incentive to bank there.
SMALL BANK CONS
They won’t always give you easy access to things like mobile banking. Not always, but sometimes smaller banks will make you jump through hoops to get started, and there are sometimes waiting periods before you can sign up or start making things like mobile deposits.
They won’t always have a lot of the features bigger banks have in the technology realm. They may offer mobile deposit, but only with certain accounts. The online interface may be slow and patchy in places, and the mobile applications may be overly simplistic and lacking in pretty standard features. Likewise, sometimes the ATMs are also lacking in pretty basic banking features, like the ability to make deposits.
The likelihood of buy-out and a merger are a pretty high. Slightly bigger banks like to buy smaller banks to help them expand their territory. The smaller bank, the greater the likelihood that your bank will be bought out and everything you love about your bank will change.
TINY BANK PROS
They will often give you the highest interest rates. This is, of course, to get and try to keep your business. It won’t stay high as they quote, but they figure once they get you set up, you’ll get comfortable and be too lazy to leave.
They care a little bit more. Again, not because they are nicer, but because they have to work the hardest to earn your business because they have the least to offer. They will often strive to learn your name and get to know your habits – something I actually personally hate, but some people like that.
Fees are often non-existent. If they do have fees, it’s usually only on certain, more obscure things like early account closure. They will also often offer better incentives for using your check card more often and keeping more money in bank.
TINY BANK CONS
They are often behind technologically. They may not offer mobile deposit, or if they do, the application crashes more often or you have to get your deposits in a lot earlier than you do at other banks, as early as 4 p.m, when other banks give you until 9 p.m. Furthermore, certain online and mobile features may be extremely limited or missing entirely. They may even go as far as to limiting what accounts you can open online, and online account opening can be quite the hassle and may still require you to go into the bank for some steps.
They are often behind, period. Things tend to be pretty basic all around. They might still fill out paperwork for things other banks do digitally. They’re often behind in updating their ATMs. Things like taking care of fraud and opening up a new account or closing one takes about five times longer than they do at bigger banks.
They often won’t give you free checks to get you started. And if they offer check card customization, it’s going to cost, and/or be more limited than at a bigger bank.
I can’t say too much about online banks as I only recently started doing business with one, but here are a few observations based on what I can tell so far: PROS: Often boasts higher interest rates than brick & mortar banks due to lower overhead – Often have a large network of ATMs or will refund a greater number or all of ATM fees – Lots of free features – Great business hours. CONS: No way to deposit cash – Limited options when it comes to depositing checks (no ATM access for example) – Slow transfer times
When it comes to finding the right fit, it’s all about what you’re looking for and what you want out of your bank. If you’re not a heavy ATM user, location may not be very important. If you’re not into technology, those features are going to be less important, as well. Things like how much money you’re dealing with, how often you use your card, how you like to make deposits, what conveniences and features you’re willing or unwilling to pay for, and even colors that you like may be more important factors to consider when choosing a bank. 🙂