Regional Banks vs. Big Banks: How Do They Stack Up?

Citigroup became a savior for Wachovia customers after stepping in to rescue the consumer banking institution.
In an all-stock deal brokered by the FDIC, Citigroup (STOCK QUOTE: C) acquired Wachovia (STOCK QUOTE: WB) banking operations for $2.16 billion. This creates another mammoth bank—the top 3 U.S. banks now have more than 30% of U.S. deposits—following a similar save days earlier by J.P. Morgan Chase of Washington Mutual.
So what’s the difference between big banks and the regional banks that are sprinkled across the nation?

“The bigger the bank, the higher the fees,” says Ed Mierzwinski, the Consumer Program Director at U.S. Public Interest Research Group, an advocacy group based in Washington, D.C. Tons of banks offer free checking accounts, and make money by charging customers for the extras, like, checks or over draft charges or other fees.

For instance, the regional Iowa State Savings Bank has hassle-free checking plus account that includes free checks, including school spirit designs, free online statements, no fees at any ATM with the Shazam logo and unlimited check writing privileges. Everything is free and easy, except for the $12 a year charge for a check card.

Compare that to giant Citibank’s EZ Checking, which offers unlimited check writing, five possible free ATM transactions at non-Citiban ATMs, and no monthly fees if you maintain a $1,500 deposit, make two monthly bill payments or use direct deposit.

Wachovia account holders should expect similar account guidelines and possibly more. “Accountholders of acquired banks should always expect higher fees,” says Mierzwinski. “Watch statements closely because another thing to expect is errors, especially with direct deposits and automated bill payments attached to your old account number,” says Mierzwinski. "Banks don’t always achieve the synergies they expect in mergers because legacy computer systems turn out to be incompatible.”