Advantages of Local Banks versus. Major Banks

Advantages of Local Banks versus. Major Banks

Finding the products, services, and rates that satisfy your needs is essential when selecting a bank. Considering large national banks vs. You might wonder if a company’s size matters to local banks and credit unions. Although both large and small banks can provide necessary services like checking and savings accounts, to some extent, they do.

The following factors should be taken into account when comparing banks:


Make sure the bank you choose is simple to deal with and flexible. Some financial institutions may have a stronger local presence than others if you prefer to bank in person.


Smaller institutions frequently have lower fees, but this is not always the case. According to research by the Consumer Financial Protection Bureau published in December 2021.1, overdraft and non-sufficient funds fees, for instance, were 13 percent to 19 percent lower at small banks and credit unions than at large banks. Determine your banking needs and compare costs for the services you require.


It’s surprising how many goods and services small businesses can offer. However, there are times when you require a megabank’s power.


It may be more convenient for you to bank with a local institution and it supports your community’s economy. The pros and cons are constant, though.

Let’s delve deeper into the distinctions between large banks and neighborhood banks.

Megabanks Operate Across the Country

Possibility of convenience

Large national banks with well-known names control major cities and even penetrate smaller markets. If you value in-person banking, a nearby bank might be a good choice. You can get a variety of services from the same organization by taking advantage of their one-stop shopping options. You might be able to use one login, for instance, to access your credit cards, loans, and checking and savings accounts.

Bank of America, Capital One, Chase Bank, Wells Fargo, and numerous other large institutions are large banks with a national presence.

Occasionally frustrating

Dealing with big banks can be challenging due to their frequently rigid systems and procedures. Even though you are familiar with and confident in the local bankers, you may be required to call a national toll-free number if you need customer service assistance. To open an account, you might need to speak with recently hired staff members or respond to numerous inquiries from the fraud department. Compare that to going to a local bank, where you can do everything in one sitting with the same person.

Prices differ

In megabanks, free checking is getting harder to find. Generally, keeping enough money in your account or setting up direct deposit will qualify you for fee waivers; however, truly free accounts are uncommon. National banks occasionally offer fee-free business checking, while local banks impose modest charges.

Local banks are active in the neighborhood

For the majority of your banking needs, neighborhood banks and credit unions are a great choice. Even though they are small, they can still fulfill your needs. Some institutions only offer a small selection, while others contract out services, and still others offer everything you require in-house.

Affordable Fees and Rates

Free checking accounts—the account you probably need the most—are frequently available at local banks. Some organizations offer standard free checking to everyone, while others offer fee waivers in exchange for your consent to receive statements electronically. Additionally, they face competition from banks that offer tempting rates on loans and savings accounts. Although online banks may still offer higher savings rates, there is nothing stopping you from having multiple accounts (both online and local).

Local expertise

Local banks might facilitate transactions because they deal with local issues. This is especially valid if you need to borrow money. Megabanks, for instance, might be reluctant to finance your local company’s, investment property’s, or agriculture loan, whereas local banks are used to assessing loans in your area.

Personalized service

Local banks typically offer more individualized service than large banks, for better or worse. Working with the same person repeatedly is not unusual. The bank staff can even get to know your needs and make suggestions for bank products that might be beneficial. You build relationships, know what to anticipate, and know who to contact when you have questions. The anonymity that comes with being a large bank customer is also lost. You might prefer to maintain a low profile if you live in a small town.

Variables are offered

While neighborhood banks and credit unions can provide a range of services, including checking accounts, merchant accounts, and wealth management, some organizations concentrate on meeting the needs of everyday customers. You’ll need to look elsewhere if your preferred neighborhood bank doesn’t handle business accounts and you start freelancing.

Participation in the community

Your choice of banks should be based on your banking requirements, but working with a local institution may give you a sense of satisfaction. Local banks and credit unions contribute significantly to the community’s economy. A local institution’s logo is likely to be present at charity runs and other events, indicating that it has donated funds or other resources to help make the event happen.

Never disregard credit unions

As you research banks, look for nearby credit unions, which are privately owned and non-profit financial institutions. Although they (ideally) exist to serve their members, credit unions can frequently provide the same goods and services as small and large banks. You might have access to thousands of other credit union branches and ATMs nationwide through a shared branching network, even if you choose a small credit union.

FAQs, or frequently asked questions

How do you locate neighborhood banks?

Keep an eye out in your neighborhood as one way to locate regional banks. Local banks frequently sponsor neighborhood events and place advertisements throughout the neighborhood, so even if you can’t see a branch, you might find the bank you’re looking for just by residing in your neighborhood. You can search for community banking services on websites like this one, which is run by the Independent Community Bankers of America.

What distinguishes a bank from a credit union?

A credit union is a nonprofit corporation owned by its member customers, which is the primary distinction between banks and credit unions. 3.

Like any other business, a bank is owned by investors and shareholders and seeks to make a profit from its operations. That distinction is the root of all other variations, including the noticeably lower interest rates on bank account deposits.

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