HomeFinanceTired of Your Big Bank? Consider These 4 Alternatives

Tired of Your Big Bank? Consider These 4 Alternatives

Checking account charges, minimal financial savings charges, impersonal buyer assist. The causes you would possibly select to depart an enormous nationwide financial institution differ, however the place you go subsequent is likely to be a tougher determination.

Many of the most important U.S. banks share many of the identical advantages, together with massive networks of bank-owned branches and ATMs and sturdy cell apps. But in addition they share many of the identical drawbacks, resembling excessive overdraft charges and low financial savings charges. If you need completely different advantages to higher fit your wants, contemplate one of these 4 options to large banks.

Credit unions

Credit unions are not-for-profit, community-focused establishments that usually emphasize buyer assist. They present comparable accounts, providers and deposit protections as large banks, however their accounts sometimes have higher charges. Compared with banks, on common, credit score unions pay greater rates of interest for sure financial savings accounts and cost decrease charges for auto and residential loans, based on June 2021 information from the National Credit Union Administration.

“Credit unions are built around service, not profit,” says Chris Lorence, govt director at CU Awareness, a division of the Credit Union National Association. “Instead of returning funds as dividends to shareholders, credit unions return profits beyond operating expenses to members in the form of better rates, improved services or access to services.”

Each credit score union limits who can be a part of as a member primarily based on sure elements. These elements can embody the place one lives or works, having a relative that’s a member and even being affiliated with a sure group through a small one-time donation. Those membership necessities imply some credit score unions aren’t out there to everybody. Another potential draw back to credit score unions is that they have a tendency to lag in adopting new applied sciences, resembling cell banking capabilities, that large banks have the means to put money into faster.

Community banks

Community banks are smaller monetary establishments, as measured by asset measurement, that concentrate on particular geographic areas. They present a significant neighborhood presence for relationship-based banking, particularly for mortgages and small-business loans. One in three mortgages in rural areas originated from a group financial institution or credit score union with lower than $10 billion in belongings, based on a 2018 report by the Brookings Institute. And in elements of the nation, a group financial institution is the one bodily financial institution for miles round and might contemplate extra customized elements for loans and different accounts than large banks can.

Community banks — outlined by the Independent Community Bankers of America as banks with $50 billion or much less in belongings — issued 4.7 million loans as half of the Paycheck Protection Program for small companies affected by the pandemic. The loans totaled $429 billion and saved an estimated 49 million jobs, based on an ICBA evaluation of information from the Small Business Administration. In addition, group banks processed PPP loans 5 to 10 days sooner than different PPP lenders.

Earlier within the pandemic, “there were so many stories of small businesses that couldn’t get an account at a large bank,” says Chris Cole, govt vice chairman of the ICBA. Community banks, in the meantime, performed “an outsized role in PPP to make sure businesses kept going.”

Like credit unions, community banks also have difficulty keeping up with newer technology used by bigger institutions and online-focused providers.

Online banks

Online banks are generally national institutions that customers access through websites and typically, but not always, on mobile apps. Because they’re branchless, online banks can pass on savings from not paying for brick-and-mortar locations to customers in the form of minimal fees and some of the highest available savings rates. Some online banks are stand-alone entities and others are online divisions of traditional banks, but either way, customers’ money is insured by the Federal Deposit Insurance Corp.

About 40% of Americans who opened online-only accounts during the first year of the pandemic did so because of their high rates, according to a 2021 NerdWallet study. Interest rates on online savings accounts can be around 0.4% to 0.5% annual percentage yield, which is over 20 times the average rate of 0.02% for the basic savings option at each of the four biggest banks — Chase, Bank of America, Wells Fargo and Citibank. Online checking accounts tend to have no or low overdraft fees compared with those four banks, which charge an average fee of $35 per transaction that puts an account negative.

Going with an online bank means giving up certain services, which can include customer support at a branch, cash deposits, wire transfers and cashier’s checks. In addition, not all online banks offer the same variety of accounts, so be sure you choose one that has the kinds of accounts you need, whether it’s checking, savings or both.


Neobanks are financial technology companies that offer mobile-first banking services, especially low-cost checking accounts with more perks than traditional institutions offer. Neobanks, such as Chime and Current, either partner with a bank to provide their accounts or, in rare instances, become a bank. In either case, neobanks have FDIC-insured accounts that act like regular online bank accounts.

These institutions use technology to provide features that most of the biggest banks and some online banks don’t offer, such as two-day-early access to direct deposits, cash deposits at retailers and more.

“Neobanks are … building lots of money management tools and financial health ideas right into their core banking services from the start,” Brenton Peck, director on the Financial Health Network, mentioned in an electronic mail. Some neobanks “carved out a niche by meeting consumers where they were struggling” financially, resembling SoFi, which began out as a nonbank pupil mortgage refinance firm.

Like online banks, neobanks don’t have every service that brick-and-mortar banks do, such as in-person support. And only a few neobanks offer high savings rates. There have also been reports of neobanks, especially Chime, having slow customer support response times and dealing with suspected account fraud by closing accounts abruptly instead of giving sufficient time for customers to respond to claims.

If you are prepared to depart your large financial institution behind, contemplate your banking wants — from early entry to paychecks to excessive financial savings charges — to see if one of these 4 options is a greater match for you.



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