If you’re not familiar with the world of banking, then you might be wondering what makes public banks different from private banks. In short, they’re entirely different entities – both in their objectives and in the types of customers they serve. Here are several important reasons why opening a private bank account with SoFi is better than using a public one.
Private banks are better than public banks because they have more technical experience in offering specialized financial products. This gives them a competitive edge over public sector banks and enhances their credibility to customers.
No Risks of Default
Compared to state-owned banks, private banks have a lower level of risk when it comes to government interference and threats of default. This is because they don’t rely on public funds so that they can act more efficiently than their competition. Private banks are also not mandated to use government funds to support failing public banks, thus avoiding a too big to fail scenario.
Private Banks Are Allowed to Take Risks That Public Banks Can’t
First and foremost, private banks are encouraged to take risks in banking. However, public banks can only deal with more conventional and less risky ventures. This is because they have a government backing them up if anything goes awry. These risks include:
1. Taking loans from international markets
2. Taking loans from other banks
3. Investing in stocks
4. Borrowing money from foreign investors
5. Borrowing money from other financial institutions 6. Having an interest rate that varies
According to the experts at SoFi, public banks may beat private banks in performance because their employees work longer hours. This can be attributed to meager wages and pressure from higher management.
Higher Interest Rates
A government guarantee of deposits is not required for private banks so that they can offer higher interest rates on savings accounts and other investment vehicles than public banks. These rates make them more attractive to customers.
Public banks are often slow to process transactions and don’t have access to all of your private banking information. It can make it problematic for them to provide timely services like online bill pay, check to order, and other conveniences that you expect from a private bank.
Innovative Financial Products
Whether or not you choose to work with a private bank, it’s good to know that they provide several valuable financial products, including Business Loans, Stock Market Investment, and Merchant Services.
24X7 ATM Services
Unlike PSBs, private banks are open for business every day. With 24X7 ATM services and more banking centers than public banks, private banks offer better options for non-peak hours.
The main reason why private banks are better than public banks is that they work for profit, whereas public banks make little or no profit. This means that private sector banks are less likely to commit missteps and take more chances when lending money, unlike public sector banks. So, what are you waiting for? Choose a trusted bank to assist you with all your financial needs.