Banking, Does Size Matter
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Since the dawn of time, we have wondered is bigger, better. Does a bigger catapult work better or one that is leaner and meaner? Do you want a bigger or smaller dog? Of course the answer is it depends on what you are doing. If you are building the catapult on site, you may want it to be as big as it can to do the most damage. On the otherhand if you are dragging it 600 miles, not so big may be more advantageous. It is no different with banking.
For the last ten years I have worked in the banking industry. I have personally been banking since I was sixteen. At the tender age of sixteen I had a paperroute and was bless to be making more money than a 16-year old should. Besides chucking papers, collections was also a responsibility. I had to pay the newspaper company. If someone didn’t pay their bill I lost out. Anyway, at the time Wells Fargo was the families bank and that is who I went with. At that age I had no notion of credit union vs. mega bank vs. community bank. Interestingly enough, I still hae the account.
In the good ‘ole days, when I had a problem, a simple phone call cleared it up. Now they are just too big to effectively handle customer interaction well, but branch visits have been quite effective. I’ve lived in a few different places and there has always been a branch nearby. I’ve traveled to different states and had access to ATMs if needed. So since this is my primary checking account, being one of the biggest banks in the US has been very helpful.
However, you have probably realized that they rarely have good savings, money market or CD rates. This is where banking with a mega bank works against you. They have so many accounts like mine that they just don’t need to pay for savings or CDs. The fact is they don’t need the money. When searching for CD rates across the country we tend to find better rates with medium size banks, ones in the $350MM to $700MM asset range.
Now smaller community banks and credit unions tend to be much more customer satisfication driven. You can usually walk-in and have coffee with one of the executive staff, especially if you’ve been a long-time customer and/or big depositor. You will often get better rates, fees waived, loan rates, etc. just because they want to keep you happy. I also find community banks and credit unions are usually often engaged philanthropically within their service area. So by giving to them, they give back to where you live. You find this sometimes with mega bank branches, but not nearly as often.
Banks of all sizes make mistakes. Although the super mega banks don’t really seem to have to be worried about being closed. Bank failures come in almost all sizes so if you are trying to avoid that, size really doesn’t matter.
Online banking has made size much less important. Most banks and credit unions offer online services and access. However, if you need $500 in cash and your 1000 miles from home, it is probably a mega banks ATM you will be searching for. Of course you’ll probably get hit with an ATM access charge. If you have an account at a credit union, you’ll probably find one that is tied into a nationwide network and avoid those fees.
So does size matter, well it all depends on what you need. Have an awesome day. We’ll catch you again soon.
Some CD Rate Sources:
Best CD Rates MI
CD Rates Florida
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About the Author:
Chris Duncan is a FINRA Registered Representative. He specializes in helping clients find the highest and best CD rates nationwide. His clients include individuals, financial institutions, corporations, and public agencies.
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