A recent study shows that banking locally has the potential to save customers money.
Although many flock to the mega-banks such as Wells Fargo and Bank of America, a study by WalletHub recently suggested that choosing smaller, local banks could end up putting a few extra bucks in users’ pockets.
John Kiernan, WalletHub’s senior analyst, said consumers tend to go to larger banks because they are more familiar with the brands.
“You’re left at the mercy of what banks happen to be in your area,” he said, noting that the availability of free ATMs also plays a big role in the decision-making process.
For a standard savings account with a minimum balance of $50, VyStar Credit Union offers an annual percentage yield — or how much an account appreciates over the year — of 0.25 percent. Wells Fargo’s standard APY is 0.03 percent, according to the study.
Major banks like Wells Fargo & Co. and Bank of America have rates that can vary up to 550 percent from city to city, according to the study.
However, these differences don’t mean much for college students who likely don’t even have four-digit amounts in their bank account, Kiernan said.
John C. Banko, a UF finance lecturer, didn’t find the study to be groundbreaking.
“Across the board, rates are as I expected — quite low, near zero,” he said.
Smaller banks may offer better rates to establish themselves in particular areas, he said. Still, the rates will have little impact on someone’s checking account balance.
“At the end of the year, you have earned about nothing in any case,” he said. “In economic terms, the differences are very small and quite meaningless.”
[A version of this story ran on page 9 on 4/2/2014 under the headline "Experts disagree about local banking"]
