Big Banks vs. Small Banks: Which is Right for Me?

Posted by Adam Gomez

With all the publicity in recent years on the exorbitant fees big banks are charging, along with the dissolution of more and more community and neighborhood banks, I have been re-evaluating where to do my banking.

It is not easy switching banks to begin with, especially for those of us with more than one account, CDs and a mortgage tied into it. Throw in my online bank account, and I’m probably looking at a day’s worth of work to cover my bases.

However, having banked with the same institution, albeit one that has changed hands several times over the last 25 years, it probably is a good idea to make myself aware of the positives and negatives of dealing with a larger bank such as mine vs. a smaller, local bank.

I have minimal experience when it comes to small banks, having opened a small business account to keep funds handy for tax purposes and business expenses. Unfortunately, I found out too late that its location, which only allows right-hand turns upon leaving, is not the most convenient. However, because they don’t charge me a monthly fee, unlike the larger bank that I deal with, I’ve found that it’s worth doubling back through town when leaving.

Unfortunately, I also recently discovered that the smaller bank’s drive thru hours on Saturday are a half-day shorter than my larger bank. This means that the paycheck I’ve been waiting on cannot be deposited until Monday.

In contrast, the larger bank seems to provide convenient access to locations in almost every town I frequent. This makes it convenient to grab cash fee-free or deposit that check on my way to the store or while running errands.

With big banks in a multitude of locations, I’m saving money, not only on ATM charges, but also on gas. And, come to think of it, my big bank is directly next to my gas station.

If I move, I don’t need to worry about switching banks, since my larger institution is national.

Still, there is the issue of customer service. My smaller business bank has a smaller number of employees, and there are a couple that call me every so often to check in. Yes, I am happy with your services, but just wish I could turn left when I leave to go home!

With the big bank, I don’t get phone calls, only lots of promotional materials soliciting me to open more accounts, apply for a loan or use checks against my credit card account for ‘instant cash.’

If you’re deciding on changing from a big bank to a small bank or vice versa, consider what’s most important to you…

Will you be visiting the bank location frequently? If so, consider its hours.
Is the bank conveniently located? This is important if you need to make many ATM visits during the week. Those fees can add up.
If you’re like me and have a variety of accounts, shop around for the bank that best fits your needs. Realize that while business accounts at some banks charge a monthly fee, other banks (in my case a smaller financial institution) will provide free small business accounts.
Especially with smaller institutions, make sure the bank you choose is FDIC approved so your funds are guaranteed if the bank goes out of business.

Customer service at smaller banks tends to be more personal, which is important when you’re dealing with money issues.

This brings to mind an incident I had at a former larger bank with a business account. Although I had opened the account under my corporation’s name, the checks I was receiving from clients were under my name. This wasn’t a problem until three years after I opened my account, after depositing numerous checks during this time. The teller refused to allow me to deposit checks made out to me, even though my account had my name and the name of my corporation attached to it. Even calling the bank’s corporate customer service line did no good.

I ended up leaving this bank and moving to the smaller bank that I now use. The staff here was eager to assist me in setting up my account and seeing to my banking needs.

Although the economy has proven that not all small banks are up to par, I’ve found that the exceptional customer service and fee-free accounts make them worth considering for my banking needs.

If I see any more banking fees on my big-bank statements, I may take the time to move the rest of my money from my large bank to the smaller one. These days, a little inconvenience is worth the extra cash in my pocket.