There's no shortage of reasons to bank local. It may surprise you that — all things equal — two out of three U.S. adults would rather bank at a community bank or credit union than one of the major national banks.
But in reality, most people don't. Why?
The megabanks earn their "mega" stripes because they spend a lot of money to bring in a lot of customers. Maybe it's a simple question of information.
While the advertising budgets may never be equal, when it comes to YOUR money, a local bank or credit union can actually do better than equal. They give you more for your money and more for your community. All while you get to bank at a better place.
5 reasons it's better to bank local:
1. Banking local makes a huge economic impact (think loans and jobs).
When you keep your money local, your bank is able to make more loans to the people in your community. Whether that's a family who needs a little help reaching their goals or getting out of debt, or the local business owners that make up the backbone of your local economy.
In fact, it's community banks and credit unions that play a pivotal role in keeping the dream alive for American small businesses. According to the FDIC, community banks have given out much larger shares of small business loans for their size as compared to larger banks.
To put that in perspective, community banks fund 60% of small business loans, nationwide. That's despite holding only 15% of the assets across the country. Meanwhile, the large banks are holding the other 85% of the country's fortune but passing the buck on creating opportunity as a lender for small businesses.
It's not just that community financial institutions lend more than their share to small businesses. They're more willing to work with small businesses and understand their needs. The Federal Reserve Small Business Credit Survey showed 18% higher satisfaction with loans from a community bank than the large banks.
Of course, more happy, successful small businesses in your community means more local job creation and employment growth in your community, and economic development for your local economy. Not to mention, there's also the more than 700,000 jobs of people who work at local community banks and credit unions themselves.
But to be able make loans, a bank needs deposits on their books. And that's where you come in. When you open an account at a loan bank or credit union, you add to those deposits.
2. Local banks and credit unions are more involved in the community.
It's not just the impact local banks and credit unions can have on the economy. It's community development too — the good they do for the people they serve in your community.
Check who's sponsoring your local high school team. That's probably not a megabank or online bank sign you'll find in the stadium. Local banks and credit unions do more for local causes and community events because they're actually part of your community. Not resigned to some corporate headquarters a coast away.
Yes, community banks and credit unions put their resources into the community, but you can find the resources you need there, too. Financial literacy has become a pillar of community banking, giving you the financial education and skills you need to control your own financial future.
However, community banks and credit unions care about more than just the people who can open accounts — with financial literacy programs that often run through elementary schools to help teach young students the principles and value of saving money at a young age.
3. Customer service is still personal at local banks and credit unions.
Wouldn't you rather be treated like a person than a number or the answer to algorithm? When you bank at a local community bank or credit union, you get the chance to hear a familiar voice or see a familiar face — it's a banking relationship built on the human relationships you have with your community.
But personal service at a community bank or credit union isn't just a cliché. It's the difference between working with someone who actually understands your financial goals vs. a faceless conversation run through a random global call center. In fact, of the all the top 10 largest call center operators in the United States, four of them are megabanks — Wells Fargo, Citigroup, Bank of America, and J.P. Morgan Chase.
That local familiarity also factors into how community banks and credit unions make decisions. Because your local bank or credit knows you, they're more likely put you in the right account for your financial situation or work with you to get the personal loan for your needs.
Sure, the math matters, but the person matters too.
4. Your local community bank or credit union is just as secure as any larger bank.
For starters, your checking account follows the same standard federal insurance. That means the government insures your deposits up to $250,000 in case a bank fails for any reason. It doesn't matter if your bank at Bank of America or Bank of Small Town U.S.A (no, that's not a real bank — but you get the point).
Megabanks, community banks, credit unions, are all subject to federal security standards and safety protocols. Any financial institution has to meet rigorous Compliance standards. And your money matters as much to them as it does to you.
Community banks and credit unions are more focused on Main Street, letting your money go further where you live, far removed from the high-risk Wall Street headlines.
Plus, many community banks and credit unions also give you access to other services to look after your total peace of mind — like a safe deposit box for your most valued possessions or even identity protection services to monitor your credit, safeguard your personal information, and assist with identity theft.
And hey, you might also find comfort in banking at a place you can trust. Not one that puts corporate profits over people at all costs. It was only last year that Wells Fargo was forced to pay a $3 billion settlement after opening fake accounts in their customers names to hit aggressive sales growth quotas.
After all, your money isn't safe until it's both secure and scam-free.
5. Local banks or credit unions like to say "thank you" in cash.
Again, you're simply more appreciated at a local bank or credit union. Your relationship means more and your money goes further. Of course, if you think all you can get from a smaller bank or credit union is a couple free checks or a toaster, then good news. Those days are over.
Today, hundreds of local banks and credit unions let you earn rewards (as in cash) as part of your checking account. At Kasasa, we actually partner with hundreds of local financial institutions to help make that possible. So you can get trusted community service, backed by the best checking accounts, loans, and other products — the type of innovation and financial value you might not expect to find with the local guys.
Like big bank perks, minus the evil.
BONUS: Top 3 rewards to look for at your local community bank or credit union:
Really high rates: Instead of letting it just sit there like it does in most checking accounts, your money can earn money. It's called an interest rate at a bank or a dividend rate at a credit union. The more money you keep in your account (up to a certain cap), the more money you can earn because that's how interest and dividend earnings get calculated.
Cash back: If you don't keep much money in your checking account, earning cash back might be better for you. Cash back just means you earn a percentage of your money back on your debit card purchases. It's based on how much you spend instead of how much you have in your account already.
ATM fee reimbursements: Since local banks or credit unions may have less ATMs of their own, our Kasasa checking accounts power your bank or credit union to refund your withdrawal fees if you use a different ATM. So you can treat any ATM as your ATM — no more searching for a free one.
You typically get the same additional banking and financial services whether you bank at a large bank, small bank, or credit union. Things like online banking, mobile deposit, debit cards.
So whether you're a community leader or small business owner — or simply shopping around for new bank account — be sure to look local first. You'll thank yourself later.