Americans have a wealth of options when choosing a financial institution for their everyday banking needs. According to the latest data from the FDIC and NCUA, there are more than 10,000 commercial banks across the nation.
Traditional banks were once the only one-stop shop for banking services. Big banks like JPMorgan Chase, Bank of America and Wells Fargo still own the majority of the market share. However, alternatives are slowly chipping away by offering similar or better services.
If looking for other benefits geared toward your specific financial needs and goals, you may want to consider these alternatives to big banks.
Credit Unions
Credit Unions generally offer similar products and services that you would find from a traditional big bank. Credit unions start to separate themselves from big banks with their business model.
Credit unions are not-for-profit financial institutions, meaning they’re dedicated to serving their members instead of the shareholders. Credit Unions generally emphasize customer support and satisfaction by prioritizing their members and community over the bottom line.
Moreover, credit unions return profits to members through lower rates and higher dividends on deposit accounts and products. For example, according to the latest data from the National Credit Union Administration (NCUA), the national average interest rate for a credit card from a credit union was 11.21% in late 2021. The average for big banks was 12.18% at the same time.
Unfortunately, not everyone can join a credit union. Unlike a traditional bank, where anyone can join, credit unions require you to meet specific criteria for membership.
Membership requirements may vary depending on the credit union. Some factors may include working for a particular employer, living in a specific area, being a part of a specialized group (school or labor union) or having a family member who is already a credit union member.
According to an Annual Report published by the NCUA, there were 4,942 federally insured credit unions around the country in late 2021. If you believe a credit union is better suited for your financial goals, find out if there is one near you.
Community Banks
As the name suggests, community banks participate in and serve their local communities. Community banks are generally smaller financial institutions determined by asset size with a focus on certain geographic areas.
Community banks are vastly different from big banks. However, they generally offer the same products and services.
Here is a breakdown of how community banks differ from big banks.
| Community Banks | Big Banks |
|---|---|
| Locally owned and operated | Publicly traded |
| Small in asset size or regional operated | National |
| Loans and banking products for people in the community | Wide array of products and services |
| Invested in lending to small business owners | Focused on corporate lending to large enterprises |
| Interested in serving local communities | Centered around the mass market and large corporations |
Online Banks
If you’re looking for an alternative to big banks without the need for a brick-and-mortar location, you may want to consider online banks.
Online banks are generally national financial institutions that serve the population through websites and mobile applications. Since online banks are branchless, they often turn the savings from paying a brick-and-mortar location to their customers through low fees and high annual percentage yields (APYs) on savings.
According to recent data, some digital banks may offer as much as 1% to 2% more on a savings account than a big bank.
While opting for a digital-only bank may come with some advantages, there are also some drawbacks to consider. You’ll end up losing certain services such as customer support at a local branch, cash deposits, wire transfers and much more.
Additionally, all online banks are not created equal. Some may only offer checking accounts, while others may offer checking and savings accounts.
Why Bank With Arizona Central Credit Union?
With thousands of banking options available, you should choose a financial institution that fits your short- and long-term financial goals.
At Arizona Central Credit Union, we take care of our members. Unlike big banks, our members are what drives us to be the best financial institution possible.
Whether you’re looking for everyday banking services or loan options, you should find a financial institution that is trustworthy and has your best interest in mind.
If you’re tired of your traditional bank, consider banking with Arizona Central Credit Union. We’ve been serving the Arizona community for nearly a century. Contact us for more information or fill out our membership application online, and a representative will contact you.
