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With New Big Bank Fees, Is a Community Bank Right for You?

With New Big Bank Fees, Is a Community Bank Right for You?

With news this week that Wells Fargo is set to charge $7 a month for checking account customers in at least six states, fee frustration fever stirred once again. Last fall's Bank Transfer Day wasn't that long ago, yet banks continue to add fees.

However, Wells Fargo customers can have the fee waived if they maintain a $1,500 minimum daily balance or make direct deposits of $500 or more, and they can get a $2 discount on the fee by opting to receive only online statements, according to published reports. Wow, when did banking get so conditional?

If the wild and wooly world of big banks is starting to feel complicated and expensive, what's about their little brethren, community banks? If you check out the Independent Community Bankers of America's website (www.icba.org), you'll get all the pluses -- "Community banks focus attention on the needs of local families, businesses and farmers. Conversely, many of the nation's megabanks are structured to place a priority on serving large corporations. Unlike many larger banks that may take deposits in one state and lend in others, community banks channel most of their loans to the neighborhoods where their depositors live and work, helping to keep local communities vibrant and growing. Many community banks are willing to consider character, family history and discretionary spending in making loans. Megabanks, on the other hand, often apply impersonal qualification criteria, such as credit scoring, to all loan decisions without regard to individual circumstances."

The comparisons get your attention.

"People have a definitive choice," says Hank Israel, a partner with Novantas, a consulting firm specializing in the banking industry.

So, what should go into making that choice? Mainly, it's about you, your priorities. "What level of service and convenience do you want? Be honest with yourself," says Israel.

If you want to be able to go to a branch frequently, and just about anywhere, well you may not fancy a community bank. The same goes for ATMs. Afterall, if you're an ATM junkie, and you use foreign ATMs, those costs can add up. If you're big time traveler, easy access could be a huge differentiator.

If you're looking for that friendly, down home service with a smile -- not that you can't get it at a big bank, but that plus probably goes more routinely to the community bank.

"The main advantage is more personal service and more flexibility," says Lauren Saunders, managing attorney for the National Consumer Law Center.

For the techy freaks who simply must have the latest, greatest in online banking and apps, your level of sophistication might not be satisfied at a community bank. It's not that they are in the stone ages, but you might have fewer bells and whistles.

While the big banks are "too big to fail," you really don't have to worry about whether your money is safe in smaller bank. If they are insured by the federal government through the Federal Deposit Insurance Corporation, your individual deposits, up to $250,000 per institution are just fine.

Before you move your money do think about what's linked to your existing account, what automatic payments do you have set up? Realize, that the grass isn't always greener on the other side. "While the credit union association reported that during the month of October new accounts increased 13 fold, what we're hearing now is many who switched didn't stay. Some people moved to institutions where they didn't have online banking and so they went back to their original bank and when they did, they didn't get as good a deal as they had when they left," says Israel.

His advice: explore your options, but be thorough in your research. If you decide to move, chill for a minute. Says Israel, "Don't close out your old account until you find out if you really like your new account."

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Inforay   |     |   Comment #1
I did an ACH transfer from my Wells Fargo Bank checking account to my credit union.  I didn't realize that Wells Fargo charges a $3.00 fee for an ACH transfer to another institution linked to the Wells Fargo account.  The fee showed up after I had already scheduled the transfer.  The Wells Fargo service representative, however, was very courteous when I called and explained I was not aware of the fee.  She immediately reversed the fee. My suggestion is that if you are unexpectedly charged a fee by a large bank you should call.  Most times, they will reverse the fee.