Tired of your big bank? Consider these 4 alternatives



Current account fees, low savings rates, impersonal customer support. The reasons why you may choose to leave a large national bank vary, but the next step can be a more difficult decision.

Many of America’s largest banks share many of the same advantages, including extensive networks of bank-owned branches and ATMs and robust mobile apps. But they also share many of the same drawbacks, such as high overdraft fees and low savings rates. If you want different benefits to better suit your needs, consider one of these four alternatives to big banks.

Credit unions

Credit unions are community-based, non-profit institutions that generally focus on customer support. They offer similar accounts, services, and deposit protections to the big banks, but their accounts usually have better rates. Compared to banks, on average, credit unions pay higher interest rates for some savings accounts and charge lower rates for auto and home loans, according to June 2021 data from the National Credit Union. Administration.

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

Each credit union limits the number of members who can become members based on certain factors. These factors can include where you live or work, having a parent member, or even being affiliated with a certain group through a small one-time donation. These membership conditions mean that some credit unions are not accessible to everyone. Another potential downside of credit unions is that they tend to adopt new technologies, such as mobile banking capabilities, in which big banks can afford to invest more quickly.

Community banks

Community banks are smaller financial institutions, measured by asset size, that focus on specific geographic areas. They provide a vital neighborhood presence for relationship banking services, particularly for mortgages and small business loans. One in three mortgages in rural areas came from a community bank or credit union with less than $ 10 billion in assets, according to a 2018 Brookings Institute report. And in some parts of the country, a community bank is the only physical bank for miles around and can accommodate more personalized factors for loans and other accounts than the big banks.

Community banks – defined by the Independent Community Bankers of America as banks with $ 50 billion or less in assets – issued 4.7 million loans under the Paycheck Protection Program for affected small businesses by the pandemic. The loans totaled $ 429 billion and saved an estimated 49 million jobs, according to an ICBA analysis of data from the Small Business Administration. In addition, community banks processed PPP loans five to ten days faster than other PPP lenders.

Earlier in the pandemic, “there were so many stories of small businesses that couldn’t get accounts at a big bank,” says Chris Cole, executive vice president of ICBA. Community banks, meanwhile, have played “a disproportionate role in the PPP to ensure that businesses continue to operate.”

Like credit unions, community banks also struggle to keep up with new technologies used by large institutions and online providers.

Online banking

Online banks are typically national institutions that customers access through websites and usually, but not always, through mobile apps. Because they don’t have branches, online banks can pass savings from non-payment of physical locations to customers in the form of minimal fees and some of the highest savings rates available. Some online banks are stand-alone entities and some are online divisions of traditional banks, but in all cases customer money is insured by the Federal Deposit Insurance Corp.

About 40% of Americans who opened accounts online only in the first year of the pandemic did so because of their high rates, according to a 2021 NerdWallet study. Online savings can be around 0.4% to 0.5% annual percentage return, or more than 20 times the average rate of 0.02% for the basic savings option in each of the four plus major banks – Chase, Bank of America, Wells Fargo and Citibank. Online checking accounts tend to have little or no overdraft fees compared to these four banks, which charge an average fee of $ 35 per transaction that results in a negative account.

Going with online banking means forgoing certain services, which can include in-branch customer support, cash deposits, wire transfers, and cashier’s checks. Additionally, not all online banks offer the same variety of accounts, so make sure you choose one that has the types of accounts you need, whether they are checking accounts, savings or both.


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

These institutions use the technology to provide features that most of the bigger banks and some online banks do not, such as two-day early access to direct deposits, cash deposits at retailers, etc.

“Neobanks… are integrating many money management tools and financial health ideas into their core banking services from the start,” said Brenton Peck, director of the Financial Health Network, in an email. Some neobanks “have carved out a niche for themselves by meeting consumers where they were struggling” financially, such as SoFi, which started out as a non-bank student loan refinancing company.

Like online banks, neobanks do not offer all of the services offered by traditional banks, such as in-person assistance. And only a few neobanks offer high savings rates. It was also reported that neobanks, especially Chime, had slow customer support response times and faced suspicion of account fraud by shutting down accounts abruptly instead of giving customers enough time to respond to complaints. .

If you’re ready to leave your big bank, think about your banking needs – from early access to paychecks to high savings rates – to see if any of these four alternatives are right for you.

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Spencer Tierney writes for NerdWallet. Email: spencer.tierney@nerdwallet.com. Twitter: @SpencerNerd.

The article Tired of Your Big Bank? Consider these 4 alternatives that first appeared on NerdWallet.



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