Learn More About National Banks

Finding the right bank is essential because you need to trust who handles your money. There are so many banks to choose from, so making the right decision can be a tough one. Among the bank choices, there are national banks, credit unions, community banks and online banks.

What Are National Banks?

National banks — commonly referred to as “big banks” — are the most commonly known commercial banks around, the largest of them being Chase, Wells Fargo, Citigroup and Bank of America. National banks are chartered by the comptroller of the currency of the U.S. Treasury and are a part of the Federal Reserve System.

How Do National Banks Work?

American banks lend millions of dollars each year to individuals for auto loans, home loans, business loans and personal loans. The bank gets this money through other individuals having deposit accounts, like savings, checking and CD accounts, through the bank. The national bank pays account holders interest for keeping their money in a savings account, and then they charge those with loans a higher interest rate, about 5-10%, depending on the loan and the individual’s credit score. This is how American banks make their money and keep the banking system going.

National Banks Vs. Local Banks and Credit Unions

Credit unions can be an ideal choice for many because they usually offer lower loan rates and higher deposit rates. However, with credit unions, there may be fewer locations and personal online management tools accessible to you as compared to a national bank. Additionally, national banks don’t require membership to become a customer, while credit unions do.

Banking with your local or community banks is also a common choice among many. Local banks tends to be more personable and friendly towards their customers. Still, these smaller banks can lack the modern conveniences and technology that national banks have.

Who Should Use Big Banks?

National banks are large and popular because they appeal to the masses. Larger banks are able to offer the bells and whistles to their customers. National Banks are great for those who need a bank convenience and availability. With banks such as Chase or Wells Fargo, you can travel throughout the country and be able to find a Chase or Wells Fargo bank.

No one can dispute the technological benefits of big banks, either. Majority of popular, nationwide banks offer free online bill pay, drive through ATMs that can accept cash and check deposits simultaneously and even the ability to transfer a check to an account by taking pictures with a smart phone.

There are of course some cons to banking with big banks. National banks tend to charge more fees, and it is possible to feel like your bank does not care for your individual financial needs. However, many still choose to trust their money with big banks because they are more convenient, and many feel that big banks are a safer institute to keep their money.