Small banks vs. big banks: Where should you put your money?

After the collapse of Silicon Valley Bank, big banks have seen an influx of deposits. But bigger isn’t always better.

Becca Stanek

March 16, 2023

On the heels of Silicon Valley Bank’s collapse, which marked the country’s biggest bank failure since the 2008 financial crisis, depositors may have started second-guessing where they bank. In fact, Bloomberg reports that as the banking turmoil has continued to unfold, some of the biggest banks have seen an influx of deposits. JPMorgan Chase & Co. “received billions of dollars in recent days, and Bank of America Corp., Citigroup Inc., and Wells Fargo & Co. are also seeing higher-than-usual volume.” Similarly, Fortune reported that Bank of America “brought in more than $15 billion in deposits as SVB sunk,” which reportedly “came from fearful customers moving their money.”

Why this dash to the big banks? Well, as Michael Imerman, an assistant professor at the University of California Irvine’s business school, told Bloomberg, it seems that the “top six banks in the U.S. are and have been too big to fail,” which leaves consumers believing that “it’s safer to go with a name with higher degree of certainty.” 

But is banking big really better? As it turns out, there are benefits and drawbacks to both big banks and small banks. As MyBank Tracker contends, “when it comes to big banks vs. small banks the winner isn’t always clear.”

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