Credit Card Approval Odds: Are Smaller Banks Better?

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Last updated on August 24th, 2023

Knowing your approval odds before applying for your next credit card can save you from the stresses of potential rejection. But how do credit card approval odds differ from small banks to big banks? Should you consider a credit card from a local bank?

How Do Credit Card Application Approval Odds Differ from Big Banks to Smaller Banks?

Credit card applications with smaller banks differ significantly from those with larger national banks, like Chase, Bank of America, and others. Here’s how:

Potentially Better Credit Card Approval Odds

Typically, consumers that consider applying for a credit card from a smaller or regional bank have a pre-existing relationship with that financial institution. According to experts, having an existing relationship with your bank can provide an edge when applying for a new credit card.

Bruce McClary, a spokesman for the National Foundation for Credit Counseling (NFCC), says that working with your current bank can provide a massive array of benefits, from lower rates to better credit card approval odds:

“This may be especially true if you have a less-than-stellar credit history but have an account in good standing,” says McClary. “That credit issuer may be more likely to consider your recent account history with their credit card as an overriding factor against other past credit setbacks related to other accounts. The more recent your financial troubles, the less of a guarantee that your creditor may be as flexible as you might like.”

Different Scoring Model

Smaller banks have fewer resources than national and international banks. At the same time, that statement seems obvious; how these resources impact credit card applications can be less apparent.

Like Wells Fargo, Citi, or Chase, large banks have their own unique credit scoring models. While these models are based on the basic FICO or VantageScore scoring models you see with free credit score sites like Credit Karma or Experian, they also emphasize features unique to those banks. Because of this bespoke credit scoring model, applications with major banks can differ significantly; this, in turn, can lower your credit card application approval odds.

Smaller, regional banks and credit unions typically rely on a much simpler credit scoring model. These models don’t differ significantly from what you see when checking your credit score each month. Because these scoring models more closely mirror free credit score services, potential applicants have a much better understanding of where they stand before applying for a credit card.

Big Banks Offer Their Own Benefits

If the approval odds are potentially better with a smaller bank, why choose a big bank when selecting your next credit card? Well, big banks became prominent for a reason.

Ultra-Competitive Rewards

Major international and national banks offer some of the most competitive credit card rewards, bonuses, and loyalty programs. Like their credit scoring models, big banks, like Chase and American Express, have their own, in-house rewards programs (Chase’s Ultimate Rewards and Amex’s Membership Rewards).

These programs offer significantly more value than most co-op rewards programs from smaller banks and credit unions. This value comes from the carefully negotiated partnerships with major brands, including travel companies like American Airlines, Delta, Hilton, and Marriott.


Bigger banks often use their financial resources to also provide their customers with the latest digital banking technologies. These online and mobile banking features make life much more accessible and improve customer support. Because international banks have the resources to invest in these technologies, they are far more likely to launch these features to customers early than a smaller or regional bank.

Should You Apply for a Credit Card from a Smaller Bank?

So, should you consider applying for a credit card from a smaller bank? That really depends on what you are looking for with your next card.

If you have an existing relationship with a local bank, why not check out what they have to offer? Many smaller or regional banks have competitive rewards with larger banks – especially when it comes to basic rewards, like cash back.

Smaller banks and credit unions have more leeway with rewards and can better cater to their local customers and their needs. Additionally, smaller banks and many credit unions provide a good platform for negotiating numbers like APR, annual fee, or even signup bonuses because of their smaller size and a relationship-based approach.

Always carefully consider the best cards from issuers of every size before applying for your next credit card. Browse reviews and compare perks before deciding on the card that is right for you – and that is where BestCards is your best friend.

BestCards has an unmatched collection of impartial credit card reviews, with over 875 reviews (and counting) to date. Whether looking to start your credit journey or add another crucial piece to your already-robust wallet, you can get the needed know-how right here from our team of experts.

Related Article: Why Are My Credit Scores Different?

Featured photo by Sarah Pflug / Burst

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About: Cory Santos
Cory Santos

Cory is the senior credit card editor at BestCards, specializing in everything credit card-related. He’s worked extensively with credit cards and other personal finance topics, including nearly five years at BestCards. Cory’s extensive knowledge is an essential part of the BestCards experience, helping readers to live their best financial lives with up-to-date insights and comprehensive coverage of all facets of the credit card space, including market trends, rewards guides, credit advice, and comprehensive credit card reviews.

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