Many Americans struggle to decide between choosing a local bank or a national bank. Some workers are hesitant to trust their money to a financial firm involved in questionable practices during the recent recession. Ultimately, most people simply choose whichever financial institution can offer them the best banking rates or convenience. So should you choose a local or national bank?
Whether you can get better banking rates from a local vs. national bank depends greatly on which state you live in. According to a Wall Street Journal analysis of more than 8,000 banks in 2012, smaller banks consistently offered better banking rates than those behemoth banks on Wall Street.
Do local or national banks offer the best banking rates?
“Credit unions and small banks, on average, pay 0.4 to 0.5 percentage point more on three and five-year CDs than big banks do,” says the WSJ.
Rates can also swing up and down, and not everyone will qualify for the best banking rates. Small banks and local credit unions usually offer better deals, but they also have more requirements and rules. For example, a small bank in Boise might have the best banking rates in the country, but you probably won’t qualify if you live in California.
And though it might seem counter-intuitive, banks with less than $1 billion in assets usually offer their customers higher yields than much larger lenders.
Can I find a bank online? I’ve heard they have the best deals…
Online banks sometimes have better savings account options, but they rarely offer the best rates overall. And if customer service is important to you, then online banking rates might not be enough to lure you away from the bank down the street.
There’s no “One Size Fits All” solution
Ultimately, the best bank for you depends on your unique financial situation. If you’re specifically looking for the best home mortgage interest rates, then you should seek out financial institutions that can offer the best rates in that sector. If you travel frequently, then choosing a bank with a national ATM network might make more sense for your lifestyle.
Now that the Great Recession is slowly winding down, many young people are saving money for the first time, while others are finally looking ahead to their financial futures. If you’re applying for a bank account, savings account, credit card, or any other type of financial plan, then you should do extensive research to find the best banks available to you.