Smaller Banks Better For Savings Yields?

When it comes to bank’s competitiveness in convenience and value for your money, there may not be a whole lot of competition between the little and big guys. What I mean here is that the bigger banks with a million branches versus the small, more localized banks with perhaps the less sophisticated ATMs and online banking protocols, may not offer the savings account holder more value when it comes to actually giving them a higher yield on their savings accounts.

So far, from what I’ve seen, this sentiment has rung true. I actually switched over to a larger, more widespread bank, and although I enjoy the (pretty much) fee free accounts and the wide access to branches pretty much every where I go within the contiguous US states, I don’t enjoy as high of a savings interest rate than I did at my former, beloved bank with the savings account.

I think that when making the decision between banks, you really have to look at what your largest goals are. In other words, is saving your biggest goal, and building on that savings? Or is convenience and accessibility a bigger deal to you? If both matter, you certainly may want to even consider going with one larger bank for your checking and business account needs, and going with the smaller local bank with higher savings account yields for your savings account.

After all, savings accounts are built on the idea that you will rarely access them, so do you really need to have ready access to them as you may get at a larger bank 24/7? Or are you more interested in building on your capital and better keeping pace with inflation when it comes to your money?

The thing is, larger, more widespread banks have a lot more money to spend when it comes to building new branches, having more sophisticated and user friendly technology, online banking and ATM’s, and other amenities, but they really don’t have a huge financial incentive in offering their savings customers larger yields on their savings accounts.

For this reason, you really may want to consider going with two different banks. Only thing is, you may want to watch what types of fees you are being charged with the bank you opened your savings with, since banks often use “bundling” to determine whether you will be charged banking fees and/or how much those fees will be.