Why you should ditch your megabank and switch to a local bank or credit union
Why you should ditch your megabank and switch to a local bank or credit union
Kasasa Blog

Find tips to improve your financial well-being

Why you should ditch your megabank and switch to a local bank or credit union

We get brand loyalty. You’ve been using the same kind of toothpaste for over a decade, there’s only one type of coffee that tastes right in the morning, a small handful of sources you trust to deliver you news.


But when is the last time you second-guessed your bank?


A lot of us sign up early in our financial lives with a national bank, maybe one offering painless on-campus signup to freshmen, or the one you went with because they have branches everywhere you go. That national bank doesn’t do as much for you as your morning ritual, though. More likely, it’s an out of sight, out of mind life process that you take for granted.


If your primary financial institution is a megabank, chances are you have a lot to gain by making the switch to a local bank or credit union. Here’s why you should rip off the band-aid and switch to a local bank or credit union, and some pointers to help you get started.


Why bank local?


Community banks and credit unions offer the same financial products as national chain banks: personal loans, checking accounts and savings accounts, auto loans and mortgages, business services, and other types of financial products. Community financial institutions will also typically offer the same products and online banking services you might have grown used to as more and more of your banking has migrated to your phone: things like online bill pay and mobile check deposit are huge time-savers.


If both tiny, local financial institutions and big banks offer these things, why switch to a local bank or credit union?


There are many upsides to choosing a community bank or credit union to manage your funds. This is something we’re passionate about at Kasasa®. Check out our deep dive on national banks vs local banks and credit unions for more, but here are some bullet points: 


Better service

Community banks and credit unions operate at a human scale; megabanks operate at the scale of global commerce. A smaller shop lets local institutions focus on real, face-to-face relationships. Local banks and credit unions aren’t reliant on Super Bowl ads with a celebrity spokesperson to open accounts like the big corporate banks. They trade on service, not sizzle.


A community financial institution is more likely to view you as a person than a number, and their customer service reflects that. As a result, a local bank or credit union is a more reliable partner in your long-term financial journey. Try getting empathy out of a national bank’s 1-800 “help center” — the person you’re speaking to is probably on another continent, and you'll never reach the same person twice.


Improved finances

National banks can be convenient, but will probably cost you more money in the long run. They’re more likely to hit you with sneaky service fees on your checking account or savings account, even if they hooked you in the first place with flashy services or rewards. Depending on how extensive your account holdings are — say checking, savings, a credit card and a loan — there are likely many ways you can improve your financial picture by switching to a local bank.


This doesn’t just mean better rates or lower fees, though you’ll often find higher interest rates on checking accounts and lower interest rates on credit cards at local financial institutions. That translates to more money for you in the long run. Many local banks and credit unions go a step further and give out rewards (as in, cash) as part of your checking account. (At Kasasa, we partner with hundreds of local banks and credit unions to help them do just that.)


Community impact

A community financial institution will be more invested in your long-term well-being, and in the health and wealth of those around you. Banking local makes a huge economic impact in common sense terms (think loans and jobs). A local bank is a local business, while a national bank is usually part of a multinational corporation.


More than half of all small business loans under $1 million come from community banks, according to Independent Community Bankers of America. Small businesses are the backbone of the nation’s economy, and owned and operated by people who are your friends and neighbors. When you bank with a community bank or credit union, your money helps support and grow your local economy.



"Sounds like a lot of work."


To play devil's advocate... for a lot of people contacting your bank for anything is right up there with lining up at the DMV on the necessary evils list. Even if you’re fed up with the long wait times and poor customer service at your primary financial institution and are ready to jump ship, you still need to get in touch with the bank’s customer service to initiate the exit. Kind of a catch-22. Can’t argue there.


You might also be concerned about the inability of a small, local bank or credit union to offer the same level of security as a megabank with a market value in the hundreds of billions. Here we can push back.


Your local community bank or credit union is just as secure as any big bank. All banks and credit unions are subject to federal security standards and safety protocols. In order to operate, all financial institutions must meet rigorous compliance standards. Many community banks and credit unions also give you access to other services for your peace of mind, whether that’s a physical lockbox for priceless possessions or a robust identity protection service for protecting your digital assets.


Switching is easier than you think


Switching banks can be a hassle, no doubt. And you’re less likely to get help with the process when you're switching from one big bank to another. Switching to a community bank or credit union doesn’t have to be that difficult.


We have a more detailed guide on how to switch banks, but here’s a three-step summary if you’re in a rush.


1. Open a new account

Many local banks and credit unions let you apply online in minutes. Or you can drive to your nearest branch and do it in person if that’s your preference — one of the major benefits of banking local. Take advantage of that better customer service right off the bat by letting the new financial institution know you’re switching banks, and asking what resources they can offer to help.

2. Switch your direct deposit and automatic withdrawals

If you have any automatic transactions, you’ll want to switch them to your new account. Think back on all the monthly or annual bills you autopay through the primary financial institution that you’re leaving. Again, ask your new bank or credit union if they have any forms or tools to help with this process.

3. Close your old account

Now you’re ready to switch! Take your money and walk. Withdraw any remaining account balance and you can close your old account before depositing that amount in your new one.

On your way to financial wellness


The stubborn fact remains: Switching banks is painful. But like that first weigh-in before a calorie-cutting diet (or a bulking phase), it’s good pain, and a crucial first step toward financial wellness.


If you’re ready to do this, Kasasa is your one-stop-shop for banking local.


Whether you need a high yield savings account, a reward-packed checking account, or a personal loan that will help you consolidate all of your existing debt and make it a lot easier and more straightforward to manage, Kasasa and our national network of community financial institutions are here to help you get your finances in focus, and be proud of your money.


Tags: Community impact, Rewards banking, Banking

About Kasasa

We believe your money should do more... for you and your community. Founded in 2003, Kasasa is a financial and technology services company working to help empower consumers to take control of their finances and be proud of their money by banking locally with community banks and credit unions in your neighborhood, that you know and trust.

These local institutions have roots in their communities, care about people over profits, and are actively invested in local businesses to help keep the economy strong (unlike some of the megabanks we could name).

We believe you shouldn't have to choose between the best banking products, the best customer experience, or keeping your money local, where it can do more good. We've created ethical banking products and partnered exclusively with community banks and credit unions. So you can have it all.

Kasasa accounts are available at community financial institutions around the country. Find one near you to get free checking that pays cash rewards each month you qualify, the only loan with Take-Backs™, and more.