When you choose a bank, you choose more than just an institution where you can stash your cash. You are also deciding on fees, services and interest rates. Whether considering a large name-brand bank or a smaller community option, here are five things to remember as you weigh your options. They make money through interest charged on lending products and service fees, such as monthly account charges, minimum balance fees, overdraft fees, and ATM withdrawal fees.
They serve the general public and are the main source of consumer banking services. They help individuals buy cars, homes, and personal loans and provide savings and money market accounts and specialized accounts such as IRAs. National banks have recognizable brands, massive branch networks, and extensive product offerings. They may provide greater convenience and functionality than local or regional banks but frequently charge higher fees and rates. Some banks also operate as nonprofit credit unions and serve members by offering lower costs and personalized customer service.
Online Banks
It’s important to remember that not all banks are the same. Choosing the right bank for you depends on your specific needs and goals. A local brick-and-mortar bank is ideal for your checking account if you want convenient access to the bank’s services, but an online bank is preferable for your savings account due to its high-interest rates.
Online banks are popular because they let you pay bills, transfer money and keep tabs on your spending with just a few taps on your phone or computer. Current offers lower fees and higher interest rates than traditional banks because they don’t have to pay for physical branches. Choosing the right bank for you takes research, but the rewards can be worth it.
Commercial Banks
Commercial banks are a key part of the economy, providing the capital and credit that helps businesses grow and operate. They provide services like checking and savings accounts, credit cards, loans, and mortgages to individuals and small to midsize companies. They also help facilitate international trade by offering services like letters of credit and revolving lines of credit. Commercial banks are typically stock corporations and make money by charging interest on the funds they receive from depositors, less the interest rate they pay borrowers.
National banks have recognizable names, enormous branch networks and extensive product offerings. But they often have higher fees and must catch up to other banks’ user-facing technology. Local and community banks are smaller, offer personalized service, and may charge lower prices.
Community Banks
Community banks are stand-alone or part of small chains and serve a specific geographic area. They make loans that support people and businesses within their community. They also give back to the community through volunteerism and charitable donations. They offer fewer financial services than big banks, such as investment services and credit cards.
Local community banks can provide a personalized banking experience because they are located, staffed, and managed in the community where they operate. They can also make loan decisions faster than megabanks, which must convene local business leaders or regional committees to approve new loans. Additionally, they can weigh customer reputation and history more heavily in lending decisions than bigger institutions prioritizing standardization. According to a 2023 survey, 72% of adults who used community banks reported satisfaction with their banking experiences.
Credit Unions
Choosing the right bank for you depends on your priorities and needs. National banks have instantly recognizable names, massive branch networks and extensive product offerings. But they also tend to have higher fees and lower interest rates than credit unions and online banks. Credit unions are not-for-profit organizations that offer a more personalized service experience, often with lower fees and better interest rates than banks. Local and community banks may have smaller branches but focus on serving their communities.
