Regional Bank or National Bank: Which Is Better?

When choosing a bank, there are many things to take into consideration. The decision will determine the fate of your hard-earned cash.

Consumers look for banks with competitive interest rates. While this is important, there are many other factors to consider before making an investment. Before choosing one bank over the other, consider factors like accessibility, customer support and online banking options.

It doesn’t matter if it is a national or a regional bank — each has valuable services for consumers. Let’s take a look.

Local banks

Many local and regional banks are referred to as “community banks.” These banks are locally or regionally owned and managed and offer traditional banking services such as checking/savings accounts and mortgages. They also operate under the same federal laws as national chain banks.

Benefits of local banks

Local banks are committed to helping the communities they serve. This means that the people who lend money to local residents and businesses understand their financial needs and the challenges they face. Sometimes this makes it possible to get a loan that is not approved by a bigger bank.

Interest Rates: Accounts at local banks are almost always offered the highest interest rates. This is why: National banks don’t care about competitive rates because it is not necessary. National banks are well-known for their stability and name recognition. Higher rates are required for local banks to compete for customers.

Customer Service: National banks treat customers as if they are just numbers, generating revenue for the institution. Local banks provide more direct contact with senior executives and offer personal attention and services. Also, local bank employees typically have greater freedom to make decisions than do those working at larger banks.

National Banks

Large financial institutions that are based in the United States and abroad are called national banks. They are required by law to be members of the Federal Reserve System. Their charter is approved by the Office of the Comptroller of the Currency, rather than a state bank department. They are often very visible and large in size.

National Banks’ Advantages

National banks are more accessible because they are larger and easier to find. There are many branches and ATM locations spread across the country, so it is easy to get banking services no matter where you live.

Technology: Although almost every financial institution is adopting the internet banking concept, it’s still a trend that national banks are leading when it comes to digitalization. Big banks, for example, typically allow you to deposit checks anywhere using an iPhone app. Smaller local banks may not yet offer this service.

Size: Community banks typically have assets of $500,000,000 or less. This may seem like a lot, but it is not when you consider a big bank, which may have trillions in assets. What does this mean to customers? This means that big banks have more money to loan.

The Winner

In certain situations, banking with a national bank is more beneficial than banking locally. A local bank is not suitable for anyone who travels often and needs access to their bank at any time. Local banks are unable to handle large-scale transactions and loans that exceed multi-million dollars. These situations are best served by national chains.

Local banks offer more than just basic financial services, however. Local banks typically offer the highest deposit account interest rates, the lowest loan rates, and the best customer service. These are all important factors to consider when choosing the right bank.

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