5 Reasons Why Clark Howard Hates Big Banks

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If you’ve ever heard Clark Howard speak on his radio show or podcast, you probably know that he hates big banks.

But you may not know the reasoning behind why the money expert has such a strong dislike for the nation’s “giant monster mega-banks,” as he likes to call them.

Here’s Why Big Banks Stink, According to Clark

Our nation has four big banks — Bank of America, Chase, Citi and Wells Fargo — that control the majority of banking activity in our country. Yet the people who choose to do business with the Big Four do so at their own peril, according to Clark.

“Many big banks seem to pride themselves on what I call ‘customer no-service,’” he says. “It’s not a question of if, but when, you’ll get ripped off by your big bank.”

In this article, we’ll take a look at the Top 5 reasons Clark hates big banks!

Table of Contents

  1. Low Interest Rates on Savings
  2. Rip-off Account Fees
  3. Higher Interest Auto Loans
  4. Uncompetitive Mortgage Shopping Experience
  5. High Out-of-Network ATM Fees

1. Low Interest Rates on Savings

Big banks are notorious for offering microscopic interest rates on their savings and checking accounts. Take a look at the latest rates as of October 2019:

Big Banks: Interest Rate Comparison on Checking Accounts

Banking product Interest rate
Wells Fargo Portfolio Checking 0.01% – 0.05%
Citi Interest Checking 0.01%
Bank of America Advantage Checking 0.01% – 0.02%
Chase Premier Plus Checking 0.01%

Now, we are in a declining interest rate environment, so we should note that many financial institutions are lowering their interest rates at the moment. But when you’re already paying near zero, how can you lower it any more?!

Meanwhile, there is a way to earn 20 times what the big banks will pay you on your money — if you’ll just do business with an online bank! We’ve got a complete guide to the best online banks and their interest rates here.

2. Rip-Off Account Fees

Not only do the big banks pay barely any interest on your money, just being a customer of a big bank may in fact be a money-losing proposition!

One member of Team Clark has a legacy checking account with Wells Fargo, back from when he was a Wachovia customer — before they were absorbed by the giant monster mega-bank.

He’s grandfathered in to a fee-free account, but if he weren’t he would be paying $15 a month just for the privilege of having a simple checking account!

Wells Fargo Standard Monthly Service Fee Waived
Wells Fargo Standard Monthly Service Fee Waived

There are four ways our team member could avoid the fee if he ever were to face it:

  1. Maintaining a minimum daily balance of $750
  2. Making a monthly automatic payment to a Wells Fargo home mortgage
  3. Having a combined balance in linked accounts of $2,500
  4. Having $5,000 in combined balances in linked accounts and “outstanding balances in consumer installment loans and second mortgages, credit cards, and lines of credit.”

Isn’t that last one outrageous? This big bank is essentially encouraging people to have thousands of dollars in outstanding debt — all for the sake of waiving a $15 standard monthly service fee.

Well, we’ve got a better suggestion: Don’t do business with a big bank!

3. Higher Interest Auto Loans

As a general rule, big banks have higher auto loan rates than credit unions. Occasionally, however, you’ll find an outlier to this rule, as you’ll see below.

Say you were going to finance a new car for 60 months with a good credit score (700-749) in metro Atlanta. We pulled several quotes from Bankrate.com and their auto-loan quote tool on October 11, 2019:

Lender Interest Rates Start at
PenFed Credit Union 1.49%
AAA 3.940%
Bank of America 3.090%
Chase Bank 4.840%
LGE (local credit union competitor) 3.60%*

* 66-month term

You’ll notice Chase is the highest (4.840%), while PenFed Credit Union is the lowest (1.49%). That pattern — with the credit union being cheaper than the big bank — generally plays out again and again.

The fact that Bank of America is the second lowest here (3.090%) is unusual. But it just goes to show why it’s always important to comparison shop.

(Editor’s note: We’ve used a 60-month loan term for illustrative purposes in this example. But Clark says the longest auto loan you should ever take out is 42 months. Find out why.)

4. Uncompetitive Mortgage Shopping Experience

The mortgage business is again booming at big banks like Chase, Citi and Wells Fargo. But banks aren’t the first place you want to look when you’re getting ready to take out a mortgage, according to Clark.


“Banks are so unbelievably inefficient as operations. So the mortgage market is being taken over by non-banks like Quicken Loans and others,” he says. “Non-banks run so much more efficiently than banks that they can make a nice profit charging less on a mortgage than a lumbering, giant bureaucratic bank.”

So, where should you look instead? Try shopping at credit unions and online lenders for starters.

“When it comes to mortgages, the difference between a credit union and a bank is that the credit union wants you to get out of debt, while the bank wants you to stay in debt,” Clark says.

5. High Out-of-Network ATM Fees

The big banks are all known to charge high fees if you’re a customer of theirs but use another financial institution’s ATMs.

  • Non-Wells Fargo ATM Fee – $2.50
  • Non-Chase ATM Fee – $2.50
  • Non-Citibank ATM Fee – $2.50
  • Non-Bank of America ATM Fee – $2.50

Of course, we should note you can avoid these fees by using your bank’s own ATMs. However, some of the big banks’ competitors will reimburse fees incurred at the ATM. These include Charles Schwab and Ally, among others.

Final Thought

As you can see, the big banks will nickel and dime you with fees that can add up fast. And they generally offer a lousy customer service experience, with higher interest rates when you need to borrow. That’s why Clark hates big banks.

Fortunately, you don’t have to be a victim of the big banks. You can move your money to any of a number of competitors like credit unions, smaller local community banks or online banks.

The online banks in particular have built their business model on offering fee-free accounts and transactions — and they pay some of the highest interest rates on your money in savings.

When you’re ready to move your money, be sure to check out our list of the best online banks.

More Banking Stories on Clark.com