Grassroots organizations declared November 5 “Bank Transfer Day.” Exactly one month later, proponents of the movement continue to encourage customers of “big banks” to transfer their deposits to smaller community-based banks and credit unions.
Large banks tend to offer more convenience—in terms of number of branches, ATM network, breadth of services, Internet presences, and types of accounts—whereas smaller banks tend to offer lower fees and higher yields on deposits.
Before switching from your big bank to a smaller bank, be sure to be prepared for the change:
- Can you make do with fewer branches, especially if you travel?
- If the smaller bank’s ATMs are not near your home or place of work, will you be willing to carry more cash and/or use your debit/credit card more often?
- Will the smaller bank’s web site, mobile applications, and online bill payment system be sufficient for your use?
If the answers to the above do not bother you, you might consider moving to or establishing an account at a smaller bank. Remember that there are probably multiple community banks and credit unions for which you qualify, so make sure to check out a few. However, beware that some banks have developed tactics to discourage your withdrawals. Robin Sidel wrote in the Wall Street Journal on December 2, 2011, that one bank required an in-person meeting before closing an account. (The deposit withdrew all but two cents from his account. The article can be found at: http://online.wsj.com/article/SB10001424052970204397704577072461772546658.html.)
If you prefer to maintain your account at the bigger bank, make sure to maintain a sufficient balance to avoid bank fees—these fees will likely wipe out any interest that you earn and more—and keep outsized balances in accounts or banks that offer better yields.
The Wealth Tip is this: You can have open accounts at different banks, not just your present one. Make sure that you have a bank and accounts that are appropriate for you. Avoid bank fees, even if it means sacrificing your interest-bearing account to maintain a necessary balance.