Q The most interesting question to me is what advantages does a megabank have over a local bank that could not be easily overcome by a cooperative?


A It's an interesting question. I don't have an ingrained bias against large banks. Big is not synonymous with bad. The real questions are if the banking services are good, the cost of doing business is low and the customer is treated fairly.

My sense is that the beleaguered big banks are not doing right by their customers, which isn't a viable business model.

I've noticed that a number of the bigger banks are increasing fees and penalties to shore up their crumbling finances. I thought fees and charges were already too high.

The behavior of the major bank credit card issuers is disturbing, too. They're raising credit card rates and fees. They're closing accounts and slashing credit limits.

These moves appear arbitrary and, to make matters worse, through no fault of their own, consumers find their credit scores nicked. (Long term, I think tighter credit terms are good, but in the short run it's tough on people.) This is happening when the economy is in recession, job losses are increasing and taxpayers have bailed out the financial system.

To me, the behavior of a number of the big banks is an opening for competitors. Online banks often pay better rates to savers because they aren't absorbing brick-and-mortar costs. Their loan terms are more attractive, too.

In many cases, community development banks and credit unions have low-fee and no-fee savings and checking accounts. And many of those local financial institutions now have excellent online services, too.

Management at community banks and credit unions has a once-in-a-lifetime opportunity to grab customers by giving them good service at a cheap price, by eliminating fees and refusing to impose unexpected charges. It always pays to shop around, but now more so than ever.

Chris Farrell is economics editor for American Public Media's "Marketplace Money." Send questions to cfarrell@mpr.org.