Banking is a necessary part of life because we store our hard-earned money. It’s not just a financial institution that offers savings and checking accounts; your bank offers many other essential services.
Advantages Of Regional Banking
1. Lower Loan Rates
If you are applying for a loan and the bank is giving you a choice of many banks to get the loan from, you should always choose a regional bank. Regional banks have much more flexible funding options and sometimes can provide better interest rates. Going with a larger bank might be much more tempting because they have more money and a more attractive name. They also make you feel more protected, but the benefits of regional banks outweigh the risks of going with them.
2. More Flexibility With Loans
Regional banks are also more flexible with your loans because if you have good credit, they will give you an unsecured personal loan or an extensive line of credit so you can take out cash from any ATM anywhere in the world. It is like you have an unlimited credit line.
3. Check Writing
Another benefit of choosing a regional bank for your checking account is that they will give you check-writing privileges. Most people look for it when it comes to checking accounts because it is the easiest way to pay bills or buy something. New banks are eliminating this service, and it’s one of the few benefits you get from a national bank, but regional banks still offer it today.
Disadvantages Of Regional Banking
1. Little to No Privacy
One of the most significant disadvantages of banking with a regional bank is that they are more likely to have your financial information available to the public. They don’t have as much privacy on their leading websites as national banks do and you need to check out their privacy policies before using them. Regional banks usually have even less in-depth customer support, which puts you at a more significant disadvantage if you have a big issue or problem with your account or loan.
2. Smaller Customer Base
The second significant disadvantage of going with a regional bank is that their customer base is usually much smaller than national banks. If you were to call the bank and ask them for some help with something, you would probably have to wait quite a while for somebody to pick it up because they are dealing with such a small number of customers. It doesn’t mean that you should avoid regional banks altogether because they can still work for you and be a good option, but it just means that dealing with them will be more challenging if something goes wrong.
3. Higher Interest Rates
The final disadvantage of going with a regional bank is that they usually have higher interest rates on their savings and checking accounts. It makes them a better choice if you want to save money, but if you need money, it would be better to go with a national bank. It doesn’t mean that all regional banks will have high-interest rates, but when you look at the entire picture, they usually have higher interest rates than national banks do.
Advantages Of National Banking
1. Security
National banks have even stricter security standards than regional banks, meaning you can rest easy knowing your money is safe. Stealing from a national bank is much more complex, so there is less risk. The only risk you have when banking with a national bank is that the interest rates are higher than regional banks. They might seem too expensive, but they are better at securing your savings, and the interest rate is much higher.
2. Better Interest Rates
National banks generally offer better interest rates than regional ones; you will see slightly higher yields on CDs and loans, including mortgages, but the overall difference would be negligible. Regional banks will have lower yields than national banks because they can’t compete with the larger institutions that hold most deposits.
3. Loans For Real Estate
A few banks specialize in lending for real estate. They will offer very favorable rates to their customers including loans for purchasing property, refilling the property, and construction loans. They also offer CD rates that are just as attractive. It might be too expensive to deal with a regional bank for such services, but you will find some of the best rates in the world of banking for such services.
4. Free Online Access
The Internet is becoming more and more accessible, so many banks offer free online banking options. It helps to motivate you to sign up for online banking. National banks will have better online access than regional ones because the demand for online access is much higher. Regional banks will soon catch up with the trend, but for now, national ones are leading the way in terms of accessing your account information from your home computer or laptop.
Disadvantages Of National Banking
1. Bigger Deposits
If you are a business owner, have a significant estate, and have four people who need access to your money, you might be hesitant to open up an account at a national bank. It will take a lot of workforce and time to set up. It can be too complicated, and the amount of money you have will have to be more prominent to get the best interest rates that way.
2. More Time To Access Funds
If you need to withdraw funds from your account quickly, it could take much longer to get this done with a national bank than with a regional bank. They are trying their hardest to make online access as effective as possible, and in some cases, they can make it almost instantaneous. But there is still a wait between signing up for an account and accessing funds through it, which will irritate some people who need money like flashlights when the power goes out.
3. Higher Costs
Regional banks will not have the same type of costs as national banks, but they are still much less than dealing with a regular bank. They can save money by not having to make the same level of security and risk management improvements. Regional banks have fewer employees and smaller buildings, so this helps them keep their costs down. Choosing a regional bank for online banking will save you money because it does not have to pay for as many employees or high-tech computer systems as national banks do.
2. Language Barrier
It is one of the most significant disadvantages that regional banks have over national ones, mainly due to the distance between some banks. Not all banking operations are conducted online. You can transfer some funds from your checking account to a savings account and then transfer some more money to a checking account for one of your children. National banks will allow you to do this, but it might not be possible with a regional bank. Financial services are handled by phone, so you might need an interpreter if the institution is at least a few hundred miles away.
3. Low Yields
National banks can offer higher yields than regional ones because they have more income-generating assets, including deposits and loans. It is why they can offer better interest rates. Some national banks will soon offer lower yields than some regional ones because there will be fewer customers. The more competition a bank has, the more likely it is that it will offer lower rates to attract new customers.
