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Knowledge Bank: Choosing the Best Bank

When it comes to banking, you have the option of selecting the size bank with which you are the most comfortable. There are pros and cons to banks of any size, which might differ depending on an individual customer’s financial needs, location, and personal preferences. However, there are many advantages to selecting a community bank that apply to a wide variety of customers.

#1: Relatability
Community banks offer a level of relatability that is less attainable for big banks. Community banks allow customers to visit a local, close-knit branch within their community. Here, customers can establish relationships with the bank employees, leading customers to feel more comfortable trusting the bank while simultaneously helping employees better understand their customers’ needs. Bank customers and employees alike can put names and faces to the people
with which they are interacting daily, further strengthening the personal relationships and service offered by small banks.

#2: Superb Customer Service
Due to their size and position within the local area, community banks typically can offer more personal customer service. Small banks have less employees and thus less divided job responsibilities, meaning that each employee has the responsibility of prioritizing and providing excellent customer service. Similarly, employees at community banks often have strong knowledge of the products and services, which allows them to better serve customers. Additionally, many community banks are mutual savings banks, meaning that they do not have
to answer to shareholders but can instead focus solely on the interests of customers.

#3: Lower Fees and Higher Interest Rates on Deposits
Typically, community banks tend to have lower fees and offer higher interest rates on deposits than big banks. For example, small banks are more likely to offer free checking accounts than big banks. According to, “free checking is only available at one-quarter of big banks,” compared to “some 63 percent of small banks.” Meanwhile, a study cited on found that small institutions and medium-sized banks “offer average rates on their checking and savings accounts and one-year and five-year certificates of deposit of 2.19
percent and 2.31 percent, respectively.” In comparison, “the average rate for the same four products at large banks…is just 1.4 percent.”

#4: Connection to the Community
Last, community banks are typically entwined to not only their customers, but also to their entire market area. Through residential and commercial loans, smaller banks improve local economies by supporting the citizens and small businesses within their communities. Additionally, smaller banks can give back to local organizations and non-profits through various charitable projects and activities. For instance, a community bank might donate to a local public
school, sponsor a youth sports program, volunteer at a soup kitchen, or help educate its community through free financial literacy workshops. Such charitable projects and activities foster a unique connection between small banks and their communities, which further develops the mutually beneficial relationship between banks and their customers.

As always, please contact us with any questions or concerns.
Switching banks can be an overwhelming and daunting process, but when done right, it can save you a significant amount of money in the long run. Each person’s banking needs differ based on their individual financial situations, but several priorities are held by a wide variety of bank customers. Therefore, the following list encompasses the leading signs that it might be time to switch banks in today’s dynamic industry.

#1: Unnecessary Fees
A clear sign that it is time to switch banks is if your current bank charges you unnecessary or especially high fees. Such fees might include charges for not meeting minimum balance requirements, overdraw fees, foreign ATM transaction fees, or paper statement fees. Often, these fees are lower, or likely even non-existent, at small banks in comparison to large banks. For instance, while many big banks will charge a fee to have a checking account, many small banks offer free checking accounts. Therefore, when deciding whether to switch banks, be sure to consider if the benefits of your current financial institution outweigh the extra charges.

#2: Non-Competitive Interest Rates
Whether you want to increase your savings or are paying off a loan, it is important to understand how your bank’s interest rates compare with those of competitors. Between small banks, large banks, and credit unions, there can be significant differences in the interest rates offered for deposits and loans, which can result in major differences in interest gained or paid over time. Therefore, you should see how your current bank’s interest rates measure up against those of other banks and if your bank cannot match the competition, it might be time to consider switching financial institutions.
#3: Lack of Adequate Insurance Coverage to Protect Your Money
Since 1933, the FDIC, or the Federal Deposit Insurance Corporation, has been responsible for providing deposit insurance to customers of U.S. commercial banks and savings institutions. The corporation provides insurance for checking accounts, savings accounts, money market deposit accounts, and certificates of deposit. For each customer of an insured bank, the corporation insures up to $250,000 in deposits. In addition, some banks, like the Institution for Savings have additional insurance coverage through the Depositors Insurance Fund (DIF). The combination of FDIC and DIF insurance provides customers of our member banks with full deposit insurance on all their deposit accounts. No depositor has ever lost a penny in a bank insured by both the FDIC and the DIF. If your bank is lacking FDIC insurance and it fails, you risk losing your deposits.
#4: Lagging in Technology
When it comes to personal banking today, customers are increasingly turning to internet and mobile banking services for many of their financial transactions. If you struggle to find the time to visit a bank branch and instead prefer to do much of your banking online, then your financial institution should offer convenient and reliable features such as online bill pay, transfers, and check deposit. Being able to take advantage of these technological services, and many more, will save you valuable time and energy, and thus might be a deal breaker when deciding whether to switch banks.

#5: Inadequate Customer Service
An integral component of managing your personal finances is establishing and maintaining a strong relationship with your bank. You should feel comfortable trusting your bank with your hard-earned money and this trust is often the result of accessible, high quality customer service. For instance, your bank should offer branch locations, hours, and additional services, such as ATMs and drive-through windows that work for you. If you find that your bank’s customer service is inadequate or inaccessible, then it might be time to switch to a bank that can better meet your specific needs.

As always, please contact us with any questions or concerns.