the 1 mile financial life
January 29, 2010 12:17 PM   Subscribe

I'd like to move my money into a local bank. What should I know?

Prompted by my move to a state that doesn't have a single Bank of America location and a cresting of my annoyance at their general dickishness (intimate and global), I'd like to move my banking to a teeny tiny little neighborhood bank with like four locations. I've always banked with big national outfits, so what do I need to know/be prepared for?


1) I am young and basically just getting my financial life started. I have only a savings account and checking account, no fancy anything else.

2) Is there any benefit to leaving my BoA accounts open with only a nominal amount of money in them (like, is it good for your credit to have had the same account for years?)

3) I don't have credit cards now and probably don't want any, but having an ATM/debit card with a Visa logo on it was really handy, is that a big bank-specific feature?

4) Someday I would like to have retirement accounts and a mortgage. Will a local bank be able to help me with all that jazz?

5) Anything else I should know? Did you hate banking with a small bank? Did you love it? Why?
posted by peachfuzz to Work & Money (26 answers total) 4 users marked this as a favorite
I'm just here to mention Credit Unions as a (IMAO preferable) non-profit alternative to banking institutions.
posted by torquemaniac at 12:20 PM on January 29, 2010 [3 favorites]

2. Keep the account open (unless they are sucking fees out of it), can't hurt. I'm not a banker, someone else might have better advice on this one.

3. Most small banks can issue a visa/mastercard debit card. shouldn't be a problem, just ask.

4. small banks can do that

5. I use a small local bank for all of our non-profit agencies banking, we've got about $500k in the bank usually, they do a great job, personal, know us, very helpful....
posted by HuronBob at 12:23 PM on January 29, 2010

yep...should have previewed... a local credit union would be even better...
posted by HuronBob at 12:24 PM on January 29, 2010

I use a local bank. Main negative is that I get charged ATM fees when I get outside of a 10 mile radius since there are no ATMs. Also I don't use it at all for retirement / investment accounts. Someone like Vanguard or Fidelity is a better choice there.
posted by smackfu at 12:28 PM on January 29, 2010

Credit unions are great.

But, your local bank should be able to get a you a visa check card. And some local banks will refund any fees that you may incur when using out of network ATMs -- look for that if you are going to need to access cash often when not around your four banks. Close your BoA accounts. To my knoweldge the only way bank accounts affect your scores (unlike credit cards) is by how much money are in them. Leaving them open but empty is going to be a headache someday, and probably cost fees. Our local bank is great for mortgages, loans, and savings accounts. Agree with smackfu on the retirement/investment side.
posted by dpx.mfx at 12:31 PM on January 29, 2010

You want a local credit union. There are advantages and disadvantages to this, but a lot of things are basically the same with the kind of money you're talking about.

Ways this is going to be a wash:

- Both national banks and local credit unions will offer you a debit card with Visa on it.

- Both national banks and local credit unions will let you do some banking online.

- Both national banks and local credit unions will have some option for free checking and savings.

- Both national banks and local credit unions tend to offer a full range of financial products, from deposit accounts, to mortgages, to personal lines of credit.

- Both national banks and local credit unions participate in a deposit insurance program, though it isn't the same one. Only commercial banks can participate in the FDIC. Credit unions have their own version, but it isn't backed by the full faith and credit of the federal government. Still, credit unions don't fail at nearly the same rates as traditional banks, so your deposits are probably about as safe as they'd be anywhere else.

Ways local credit unions are better than national banks:

- Local credit unions have better free options than national banks. You can get more for free, and more for less than you can elsewhere.

- Local credit unions have much better interest rates for deposit accounts and CDs than national banks. they aren't taxed the same way, and they pass this on to their customers pretty aggressively.

- Local credit unions can and frequently do take a more personal approach to banking.

- Local credit unions usually do not charge fees for ATM access anywhere.

- Local credit unions are far more likely to offer unsecured personal loans than national banks.

Things you should watch out for:

- Your statement is likely going to suck. I've been at three different credit unions in two different states, and none of them produced a statement that was anywhere near as readable as anything I've gotten from BoA, Chase, or PNC.

- Your online banking is also probably going to suck. Like seriously suck. Every credit union I've banked with has had an awful site, which doesn't let you do as much as Chase or BoA will, and makes doing what few things you can do ridiculously difficult by comparison. If you actually want to use your online banking a lot, this can be a huge pain in the ass. The big boys spend a lot of money on their websites, and it shows.

- Local credit unions may or may not play nice with financial software like Quicken. YMMV.

- If you do a lot of traveling and use ATMs a lot, you could be looking at some decent fees, because while the credit union itself does not impose a fee, the proprietor of the ATM probably will. They get you coming and going, unfortuantely.

- Local credit unions are, well, local. Trying to get banking done when there isn't a branch nearby can be a pain in the ass too. If you don't travel much, or aren't in school, or something where you're regularly going to need access to banking services out of your area, this may not be a big deal, but if you are, this is actually a pretty significant consideration.

In summary: if you aren't terribly picky about online access and legibility of statements and you don't travel much, credit unions can make a hell of a lot of sense. Otherwise, consider switching to a regional bank or sticking with a national one. I've been pleased with Chase for the years that I've been with them, and they have the upshot of being one of the only big players not to get tangled up with the sub-prime debacle, so I feel good about that.

Ultimately, you just have to do something that works for you. No one but you can decide which of the above features matters to you.
posted by valkyryn at 12:42 PM on January 29, 2010

I also would recommend a credit union. They can give you online banking. They can give you a credit card. They can give you an ATM card that can be used at any credit union ATM anywhere in the world without fees. Unlike the banks at each others throats, the credit unions tend to cooperate. You may even find some credit unions that will allow you to do deposits and withdrawals at their fellow credit union branch locations. Check a few local credit unions and see which offers the most features you are interested in.
posted by JackFlash at 12:44 PM on January 29, 2010

Only commercial banks can participate in the FDIC. Credit unions have their own version, but it isn't backed by the full faith and credit of the federal government.

There are two forms of insurance for credit unions. The NCUA is similar to the FDIC and is indeed backed by the full faith and credit of the U.S. government. The other is private insurance by the ASI (American Share Insurance). I would recommend looking for a credit union with NCUA insurance which provides the same guaranteed as FDIC insurance does for banks.
posted by JackFlash at 12:56 PM on January 29, 2010

JackFlash, thanks for the correction on NCUA. Given that most consumers don't actually make choices based upon deposit insurance most of the time anyways, I think that's even more in the "wash" category than it was before.
posted by valkyryn at 1:00 PM on January 29, 2010

I have an account at a local credit union and enjoy the rates on CDs but they otherwise suck at being a bank.

When I still had a debit card with them it wasn't unusual for the ATM to show zero dollars in my account, or for my card to be rejected for insufficient funds despite having hundreds of dollars available. YMMY, though.
posted by barake at 1:27 PM on January 29, 2010

Find out what the fees are on your Bank of America acct before you decide to leave it open. They are real fees-hounds and will get you for anything they can. I had to close my BoA acct awhile back because the fees were eating me alive.
The Visa/mastercard debit thing should be pretty standard at this point. If they can't provide it, I would not really trust them.
I know people love to recommend credit unions but it's not always that easy to find one you are eligible for and one that has decent features like a nice online banking set up.
However one good thing about credit unions, in case you need more, is that in some places they have credit union networks so you can do your banking at another credit union in the network if you're out of town or something.
If they have National City/PNC Bank where you live, I can give them a good recommendation.
posted by amethysts at 1:28 PM on January 29, 2010

Check for a US Bank in the area...the local branches truly know their customers (at least mine does) and their website/online banking is top notch. I've also held auto loans and currently have a mortgage with them. With free-online bill pay and their rewards program, I'm quite pleased with their level of service, however YBMV. (Your banking may vary).
posted by bach at 1:34 PM on January 29, 2010

I'd look into Schwab. While they don't have many branches they do have a good APR on checking (.75% - almost unheard of for checking) and they reimburse all ATM fees that another institution may impose on you. In that way every ATM is your ATM.

Also their customer service is great. Their retirement/investment service is really robust too. Give em a call - they're great people.

As for savings I use ING Direct, just to keep the money a little separate from each other. Also they offer one of the better interest rates for savings, though all savings rates are low now.

I've had nothing but good things to say about both instituions, surprising in the banking industry.

I don't see any reason to keep the BOA account open - as that doesn't affect your credit score at all. Credit score is determined by credit availability, not financial accounts. I'd open even a small credit card just to start building your score.
posted by jourman2 at 2:10 PM on January 29, 2010

No atm fees if I go to another credit union They were awesome when they serviced my mortgage. They insist that I take pens, dog biscuits, etc., when I visit. (Fortunately, I have a dog.) My dog used to get loose and visit the credit union nearby, and they'd bring him home. They're allowed to pay slightly more interest. So, yeah, small town feel, solid banking, join a credit union.
posted by theora55 at 2:20 PM on January 29, 2010

Our local credit union has our mortgage, car loan, credit card (we transferred our high interest accounts to a low interest one they gave us). We have no fees and they give us lower interest rates when we let them deduct the payments from our account. Our online banking/billpay is awesome and the statements are fully comprehensible.

We have no ATM fees, and our credit union has reciprocity with ATMs all over the place. They also have reciprocity with other credit unions in surrounding states.

Sometimes local credit unions have names that might make you think you can't go there (like "state employees" or "university") but often you can. Just ask!
posted by Knowyournuts at 2:21 PM on January 29, 2010

- Local credit unions are, well, local.

See if you have a local credit union that is a member of CO-OP Financial Services. They have shared branches, nearly 4000 in the US, which means member branches can serve you as if they were your CU. They also run an ATM network; I believe there are no fees for members.* Al least around here, 7-Eleven ATMs are on the CO-OP network.

*I'm in the process of ditching Chase bank and I'm looking at two local CU's. I'm not 100% sure there won't be an ATM fee.
posted by hydrophonic at 2:38 PM on January 29, 2010

Seconding hydrophonic:

I use a local bank. Main negative is that I get charged ATM fees ...

This is another reason why you should consider a credit union - many (most?) of them are on a network where you can walk into another credit union another credit union anywhere in the US and do business, NO FEES.
posted by whatzit at 4:33 PM on January 29, 2010

I used to have a credit union, and their online bill pay was STELLAR.

Also, I've heard great things about some credit union associated with the military that allows you to deposit checks with your iphone, but I can't remember the name and google is currently failing me. I will try to remember.
posted by dpx.mfx at 4:45 PM on January 29, 2010

I use a local bank and it is awesome. I am not charged any fees by the bank for using other ATMs. In fact, at the end of the month my bank refunds all the charges from ATMs.

So just check out the different fees at your local bank vs. any credit unions, etc....

And I think this was mentioned, but again, there's no good reason to leave your old account open.
posted by grapesaresour at 5:56 PM on January 29, 2010

You could also split some money between a bank and credit union. We keep our savings at a credit union that offers a higher return rate, so we'll have a relationship with them for loans, etc., But our checking is at a regional bank (150 branches) that has a good billpay site and more ATMs. That also keeps us from transferring from savings to checking on a whim.

And close the B of A. If you don't access it regularly, they'll probably start slapping a dormancy fee on it.
posted by saffry at 6:28 PM on January 29, 2010

I have used a credit union exclusively for 34 years. So I am nthing a credit union.
posted by snowjoe at 6:49 PM on January 29, 2010

My local bank is also awesome and they refund ATM fees as well. Online banking also fine.
posted by Rocket26 at 7:00 PM on January 29, 2010

I have a credit union account in the state that I used to live in. I love them, they are terrific, have decent online banking [and I can even IM with a banker if I need assistance during the day] and decent rates. They have always treated me like a person. When I moved to a small town in Vermont, I opened up a second account at the local bank so that my landlady would get local checks for rent. My local bank [five branches maybe?] has tellers that know me, in fact who know everyone in town, and are totally nice and decent. They don't offer credit cards, but I do have a debit card through them. I can use my credit union debit card at pretty much any credit union ATM. There's a fee to use my small bank ATM card when I'm away from home so I stock up on cash before I go places. There are decent benefits to both [credit union and small bank] systems, but I really like the feel good whuffie of a credit union. That said, the only one near me doesn't even have an ATM so it wasn't a decenbt option for me where I live. Think of maybe the top five things you want a banking institution to do for you [which it looks like you've mostly done] and move forward from there.
posted by jessamyn at 7:13 PM on January 29, 2010

I've banked at a credit union, a small local bank, and a large national bank. Online banking was minimal at the first two, but that was a long time ago, too. It was really nice to be able to call the local bank and talk to an actual, live, intelligent person. Plus I had more of a sense that I was supporting the economy of my community by keeping my money inside it.
posted by lakeroon at 8:18 PM on January 29, 2010

hi peachfuzz! good to see you tonight :). I'm going to nth everyone saying "get thee to a credit union" because both mr lfr and I have gone from big national banks to a local CU in the past 2 years and we only wonder why we didn't do it sooner. Didn't affect credit scores at all and we can use any CU ATM on the NCUA network nationwide with no fees. Oh and their online banking kicks serious ass. My old bank wanted $7/mo for me to online bank, plus they charged transaction fees! Screw 'em, I say.
posted by lonefrontranger at 9:23 PM on January 29, 2010

dpx.mfx, you're talking about USAA. They're great, and although they limit some services to military personnel and their families, I believe their checking/savings accounts are open to anyone. They're not local, but they are a great company with great service (and they're not a bank).
posted by Chris4d at 11:11 AM on February 2, 2010

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