A small bank, according to the FDIC’s definition, is a bank with assets under $1.384 billion for either of the two calendar years prior to December 31, 2022. That may not seem like much, but it’s a fraction of the trillions of dollars in assets that some larger banks maintain.

The Best Places to Get Better Banking

Whether you need a business checking account, a savings account, or a credit card, a small bank may be able to deliver the service at a lower cost than a big name institution. In addition, smaller banks typically offer higher rates on interest-bearing checking accounts and savings than larger institutions.

Smaller Banks Why Small Banks Might Be the Best Fit for Your Financial Needs

Unlike the megabanks that dominate Wall Street, small banks operate locally. Their insight into local market conditions and knowledge of their customers enables them to approve loans that a big bank might pass up on.

Relationship-Based Banking

A small bank’s loan officers take the time to consider a customer’s family history and discretionary spending when determining approval for a loan. This is a far cry from the impersonal qualification criteria that megabanks apply, which typically require a high credit score to get approved.

In fact, small banks are also more likely to pass on the Federal Reserve’s recent rate hikes to savers. Many internet banks, for example, are offering significantly higher rates on their savings and checking accounts than the big names. Moreover, these banks are less expensive than their bigger competitors to run and have a stronger commitment to local communities.