Ask the Readers: Are Local Banks Better Than Big Banks?

I really liked my local credit union, and still use it for a small personal checking account. It’s great that the credit union has less fees, but I was able to get my main checking account fee-free at a national bank as well. My biggest reason for using either of the 2 credit unions I have access to in my area, is they both hold all deposits for 10 days (unless it’s direct deposit). Obviously my paychecks weren’t fine, but to not have access to any unexpected paper checks for that long was frustrating. Once I realized bigger banks did 2 business day transactions, I just didn’t want to deal with it anymore. It got too confusing to figure out when my money would be available.

I learned to go with local banks the hard way. The big guys would put the biggest checks through first and then charge as many bounce fees as possible when they could have put the smallest checks through first and only bounce one. And when it was an honest mistake and was not a routine occurrence, they still wouldn’t waive the fee. It’s like they were out to collect as many fees as possible from you. The local banks don’t operate like that. They are far more reasonable, and even their fee schedule is completely different. I’ve gotten burned more than once with the big guys. Our mortgage is local, and our checking accounts are with the local banks as well. Wouldn’t have it any other way.

To answer the request, a local credit union is most likely going to keep the money local, but do inquire about their policies.

I use a mix of the two, I have my money with my previous school’s credit union, Bank of America, and ING. Most of my money goes to BoA (only while my free student checking and savings remains free) due to the convenience of their ATM’s and branches. I also have to say that BoA charges a ton of fees, but a simple call to their customer service will get them reversed hassel free.

ING holds the bulk of my savings due to the higher interest rates on their savings account and CD’s. I liked ING’s service and ease of use when I was looking for a high yield savings account and have made the decision not to go chasing rates, lest I forget where my money is.

The credit union holds my mortgage and also has a savings account into which a portion of my pay is direct deposited to pay the mortgage. It is also my primary checking account for bills and taxes. The CU’s loan rates were the most competetive when looking for mortgages and their CD rates beat most of the big banks (not the online only banks though). The credit union also has a lot of programs designed to help the community such as winter oil loans, cheap car loans, and monthly drawings for gift certificates to local retailers.

In the future I plan on closing my bank of America accounts and shifting everything over to my credit union and ING, though BoA is saving me on ATM fees currently as the number of SUM ATM’s seems to be greatly declining. Another benefit of this move, is that I will then be able to participate in my credit unions high interest checking accounts.

I am such a huge fan of credit unions, where the teller knows me, where I am a cooperative member and not a cashcow customer, and where my money goes back into the local community, and where by law and unlike banks, loans must be backed 100 percent by cash deposits. I am so done with the Big Bank after being nickel and dimed to death and treated like dirt. There are sometimes minor issues with the credit union, like not enough branches, but I do almost all of my banking online, so it works out for me.

Having both worked for and banked with a regional bank in the past, I can honestly say that I’m much happier banking with Wachovia (although I might go to Chase since I’ve read some bad things about Wells Fargo). I don’t need to talk to representatives, I don’t have worries about clearing procedures, I don’t worry about bounced checks and I really don’t even make that many transactions in general. My main concern is that there are ways to access cash whenever and wherever I need for whatever reason, and the areas which I travel to are (or at least were) well-serviced by Wachovia.

I had an incident with a regional bank here in South Florida called BankAtlantic. I used to make what they considered to be “too many” transfers each month and closed my account claiming they had some reporting issues that they had to comply with or something along those lines and weren’t able or equipped to do so (I really can;t remember the specifics). Since I had a Roth IRA, a taxable brokerage account 2 savings accounts, and a business checking account I guess I was too “complicated for them”. That was the last time I used a non-national institution.

I think the more a person learns about financial management and the better they get at the practice of managing money, the type of bank used becomes less of a concern.

Well, I’m probably biased in my opinion because my husband is a lender at a local bank. If you don’t mind my bias … we do almost all of our banking at our local bank. Outside of that we have an online savings account. As a lender, my husband has been able to deal with people on an individual basis to try to work things out for them. He’s also more likely to go the extra mile for someone that’s been loyal to the bank. The national banks don’t care if you’ve been a customer for 5 minutes or 50 years.

For customer service local banks win hands down, the big guys are so impersonal. I had to listen to my co-worker rant loudly at B of A yesterday, in the end she decided to close all 11 of her accounts. I bank with both types. The rates and service are better at a smaller, local bank but they aren’t as convenient usually.

I’m a bookkeeper by trade. I’ve worked with all the big banks and most of the smaller ones in my local area at one time or another. Hands down – I chose smaller.

For our personal funds I use a credit union, and the only time I’ve ever had a problem was when I tried to send an international wire (and part of the problem was on the receivers end.)

For business – the best bank I’ve ever worked with was Dai-Ichi Kangyo. Perhaps they are huge in Japan, but they only have a couple branches here so I think of them as small. My contact was a V.P. Any time I needed anything I called him and got it taken care of within minutes. With major banks getting anything done takes too much time and effort. And maybe this is just me, but I like dealing with the same person each time rather than going through a phone bank.

I used to bank with a big bank but I hated it for all the reasons mentioned above and particularly because I always felt like they were trying to wring out of me every cent they could and giving nothing back (I think the interest rate on my savings account was something like .05%). My main hesitation with joining a credit union was lack of access to my money despite the fact that their community-oriented, nonprofit practices so much better matched my own philosophies. So I was really pleased when I discovered that most credit unions (at least in my area) are part of the Co-op Network, which means I can get cash for free at their ATMs and often make deposits too. Now I have access to so many more free ATMs than I ever had when I banked at a big bank with a big local presence and significantly better customer service when I need it too.

I use my employer, a national bank, for checking and the benefits that come with being an employee. I advise keeping an account with a national bank to enjoy the benefits (lockbox, thousands of ATMs, many many services) but you should do most of your normal banking with a local bank or credit union.

I can’t speak to how we treat customers or normal people though, as that isn’t my area.

When I was 11 and wanted to open my first savings account, my mother took me to the local credit union to do so. When I got my first checking account and debit card, it was at the same credit union. Every time I talk to one of my friends about their banks, I’m grateful that my mother took me to the credit union instead of a bank.

All the tellers there know me, and are willing to help me out with whatever I need. When the debit card company sent my new debit card to the address of record (instead of to the credit union as I’d requested), the secretary was incensed on my behalf, and made a far more scathing phone call to Mastercard than I could have done.

I’ve never paid anything for my checking or savings accounts, and I’ve always earned interest on both checking and savings. Opening a new account took me about 20 minutes. Changing my name took about 20 minutes.

If I miscalculate, and write a check for more than I have, I have an automatic overdraft line of credit that covers the difference. If (for example) my rent check goes through before my paycheck gets deposited, and the difference is greater even than my line of credit, my savings account acts as another buffer. Only if I’ve truly exhausted every penny I have and still can’t cover the check do I get charged an overdraft fee. And if I go in and explain the situation (I was SUPPOSED to get paid on the first, but my stupid boss decided to date the check for the third) they’ll often waive the fee and put the money back in my account.

(Contrast this with friend of mine who banked with TCF and used his debit card 3 times when the checking account was out of money. As a “courtesy”, TCF allowed those transactions to go through, and charged him a $30 fee each time. Each transaction was less than $3, so for going over his limit by $10, he was charged almost $100. (He deposited enough money to cover the difference within 12 hours))

Also, my credit union is part of the co-op network (http://www.co-opfs.org/public/locators/atmlocator/) which means I can do all my banking at nearly as many locations as if I was with TCF or B of A.

Join a credit union. It’s the best decision I ever had made for me.

I’ve only belonged to 3 banks in my life. The first was a state employees credit union. I’m still a member and still even use those accounts (although I no longer live in that state). But I always get good service and great rates.

My second bank was SunTrust (initially NBC before they were bought out). Large bank, but conservative lending practices. Service is sometimes great although there was a time, for about a year, I got bad service. But they didn’t sell my mortgage and provided me the perks you expect – free checking. I was most impressed that they never sold my mortgage (8 years) and that refinancing was cheap and easy with them.

Now I’m moving and am going with Bank of America. I chose them because they had the best rate on a mortgage. I’m also getting free checking. So far I’ve gotten great service, but I guess time will tell. But with the fantastic loan I’m getting (far better than anyone else could match) I’ll take a drop in quality of service because I’m saving a bundle over the long term.

Having read through the comments, I wanted to add two things:

My credit union has had online banking for at least 9 years (I know I was able to do my banking online when I left for college; before that I didn’t much care).

And most checks I deposit are available immediately. The only hold time is for out-of-state checks and non-paychecks over $1000.

I would say yes, only in that credit unions typically offer better service.

Then again, how often do you go into your bank? I know some must do it fairly often… but we do everything electronically.

Banking is becoming a commodity for me — give me the best price (interest rate) and best features, and I’ll stick with you as long as your service isn’t terrible. Thankfully ING is awesome on customer service, so no complaints there.

” Tana Says:
December 12th, 2008 at 5:23 am

I learned to go with local banks the hard way. The big guys would put the biggest checks through first and then charge as many bounce fees as possible when they could have put the smallest checks through first and only bounce one. And when it was an honest mistake and was not a routine occurrence, they still wouldn’t waive the fee. It’s like they were out to collect as many fees as possible from you. ”

This same thing is what finally convinced me to close all my accounts at Wachovia and go with the Navy Federal Credit Union. I already had my Mortgage through them, and a savings account. I couldn’t have made a better move.

My local credit union used to be restricted to the employees (and their family members) of my city’s largest employer. That employer’s not so large anymore, and the credit union’s no longer restricted to employees, but I’ve never had a single reason to complain about their service. When someone made fraudulent charges on my credit union debit card over a weekend (purchases made in Mexico, when I was nowhere near it), I got a call from the credit union within hours, asking me to confirm the charges — and they helped me fix the situation within days. They won my loyalty then and there.

I have an online savings account for long-term savings, but my checking account, debit card, credit card, Roth IRA, emergency fund, and a small ‘flux’ savings account are all with my credit union. The only drawback is that I can’t make fee-free ATM withdrawals unless I’m back in my hometown, but that’s a very small price to pay for my peace of mind.

My mom is a branch manager of a small local bank in my home town. She is the manager of their only branch bank actually.

I still have a savings and a checking account there but I don’t use them for my primary accounts.

The cons to the small bank is that they only have 1 ATM machine and until this week infact had no online banking. So when I traveled for work I would always have to pay ATM fees. The small bank didn’t charge me fees for using another banks ATM but the other banks did.

The BIG Pro to this bank is that they don’t sell their loans. That means if you have a home or Auto loan through them. They actually hold the loan. No securitized debt at all.

They have not forclused on a single home or repoed a single car in this entire down turn to date.

They are almost completely sheltered from the current credit cruch. They are still making loans. Business as usuall.

Their standard savings interest rates are roughly the same as all the other major banks but they have special savings programs that offer better returns and CD rates are pretty good as well.

Plus if you actually go into the bank there is a good change the bank owner will stop and say hello or get you a cup a coffee if you are waiting to talk to someone.

I use a local bank and have been with the same one for nearly 10 years and 4 mergers / buy-outs of other local banks. In the process their name has changed 3 times but the customer service and support has always been good. My main reason for sticking with them is that they have branches scattered all over and have branches in all of one local grocery store with Sunday hours.

This is only my checking account though, savings is with ING.

I did open an ING checking account to take advantage of a $50 sign-up bonus they were doing last month, but plan on closing it in Feburary or so as I don’t need two checking accounts. I also only write about 3 checks a month, those are for bills I can’t pay online or are too much of a hassle to pay in person.

Maybe I’m low maintenance, but all I ask for is a bank with good customer service when I need it, the ability to accept my direct deposit from work and local hours should I need to stop in and deposit or cash something. So long as it’s FDIC insured, doesn’t much matter to me what name is on the building.

I have an account at my local credit union which I love (they have free coin counting machine) and one at a national bank, i travel alot and make alot of deposits by check since I am self employed, my local credit union takes a longer period to clear my checks vs the national bank.

Now that i think about it, i never had any fees charged on any of my accounts, I do reconcillation every month and I always read all the fine print, and avoid any monthly charges.

My wife used to work at the Credit Union that we use, and we’ve been with them for sixteen years jointly (and she’s been with them since she was sixteen years old). Overall they have their ups and downs like many other organizations, but on the whole they have treated us very well and we have done well with them as our primary and immediate needs bank (plus, since we live very much on the “envelope system”, we do a lot of face to face cash withdrawals, since the ATM doesn’t typically give out that much as any one time ).

I keep a secondary account with ING direct for my own “Blow Money” (easier to deal with at times that just hanging onto the cash). Our emergency fund and bills escrow account (the place we put money for those periodical but every year events like homeowners insurance, life insurance, property taxes, auto insurance, etc.) all reside at our credit union, though.

Personally I started out with Chase as my first real bank account went with them for several years and switched to ING Direct and I couldn’t be happier. I don’t want personalized service, I want a bank that holds my money processes deposits and checks and pays interest.

Some local and regional banks offer online checking accounts with interest rates that clobber the big banks. You have to search for them but the search can be worth it.

We bank at an employer credit union and also a major bank (that just got taken over by another major bank). One of the reasons we had to go with a major bank was because we’d moved and no longer had physical access to the credit union or non-fee ATMs so getting cash was difficult. Now that we have access to the C.U. again, we do most of our banking there. I do love the online banks, though, and have a money market, savings and a CD just because of the great rates. If I can get a better rate at my CU, I go there, but that’s only happened a few times. It’s so much easier to get loans at the C.U., which we’ve had to take advantage of in the past.

I have a great local bank, well it used to be a local bank when I started there,but now it’s pretty big. I bank at TD. Used to be Commerce Bank, when I started there it was only in PA, NJ and NY, it was bought up and now it’s a goliath, but they still have no fee checking and great service. So I’m staying.
I don’t invest my money there, bank CD’s are untrustworthy and the returns are subpar, and who knows if you’ll ever see your money again these days!….I don’t borrow money so their loan rates are not an issue…I don’t even know what they are!
I stash my cash in a MMMF, I just don’t trust banks anymore (or FDIC for that matter) with my liquid cash…A good money market manager with a worthy track record is safer (IMHO)…I trust Vanguard to safeguard my money more than I trust the federal government!

“But that’s not the only way a person’s conscious can guide him.”

*cough*

Conscience.

Unless you mean to say we shouldn’t be making choices subconsciously.

To answer the question, though… I used to bank with a local credit union, and loved them. They would even waive overdraft fees and such if I went in and asked them nicely. But the interest rates on their savings accounts weren’t great, and you didn’t have access to ATMs while traveling. So when I moved, I had to move banks… seems like all large banks suck, though I’ve been pretty impressed with ING Direct. You still have to have a brick & mortar account. So far I’ve been through Chase, switched to WaMu, oops, now I’m with Chase again… none of them are great, but I’m not eligible to join any local credit unions, so that’s where it stands right now.