Too Many Banks

Do you think we have too many banks in the United States? There were 8,451 FDIC-insured banks as of June 30, 2008. Canada, on the other hand, with 1/10th of the population as the U.S., only has 81 banks, which can be listed on one page. On a per capita basis, we have 10 times as many banks as in Canada.

Of course the benefit of having this many banks is competition, which is usually good for the consumers. When I was in Canada a few years ago, I was astonished how hard it was to find a basic free checking account (or chequing account as they spell it).

I just looked on a few Canadian bank web sites. It’s still the same today. Even the most basic account has a monthly fee. You need to maintain a $1,000 minimum balance to waive the monthly fee. Then they also charge you for each transaction after you use up your allowance of 10 or 15 free transactions per month. That kind of metered checking account is almost unheard of in the U.S.

Intense competition also can go the wrong way, as we know by now how banks were stepping over each other offering mortgages to subprime borrowers. They can’t charge you monthly fee, so they gouge you on foreign ATM and overdraft fees. I think we have too many banks in the U.S.

Refinance Your Mortgage

Mortgage rates hit new lows. I saw rates as low as 3.25% for 30-year fixed, 2.625% for 15-year fixed, with no points and low closing cost. Let banks compete for your loan. Get up to 5 offers at

FREE E-mail Newsletter

Join over 3,000 readers and get new articles by e-mail:

No spam. Unsubscribe any time.


  1. simplesimon says

    That’s a crapton of banks!

    I’m interested in seeing some sort of chart laying out what percentage of individuals in the USA bank where. Why do people choose smaller no-name banks/credit unions? Why don’t big banks like BoA, Wells Fargo, WaMu, and etc offer better rates? I’m sure they know what kind of services people want. Fees suck.

    I just started digging around the Boglehead forums for more info on mySmart Cash accounts at Fidelity. From the posts in January-March, reviews seem mixed. How do you like them now? I thought about just closing my WaMu online savings and free checking for a Fidelity money market fund and a mSC account.

  2. Harry Sit says

    simplesimon – I have been using Fidelity mySmart Cash account for over a year. I’m still very happy with it. I never have to worry about ATM fee or overdraft fee.

  3. Ted says

    Note that the US also has a disproportionate number of banks that are “too big to fail” and we have so many little guys eager to get in the game. That tells you something is/was wrong right there.

  4. Meg says

    Actually, we spell them “chequing” accounts. “Checquing” looks too darn hard to pronounce. 😉

    I still get gouged on ATM and overdraft fees, though. Maybe I need to start looking into some of CIBC’s competitors.

Leave a Reply

Your email address will not be published. Required fields are marked *