Community banks and credit unions give you more for your money and more for your community, all while you get to bank at a better place.
There's no shortage of reasons to bank local. It may surprise you that — all things equal — one 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.
Here are 5 ways banking local is better for you and your community.
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 taking out an auto loan for their second car, or the local business owners that open a new credit card account to manage daily expenses. They 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. Even during the pandemic, the paycheck protection program was fueled by small institutions nationwide.
As a member FDIC institution, community banks have given out much larger shares of small business loans for their size as compared to larger banks. The Federal Reserve Small Business Credit Survey showed 18% higher satisfaction with loans from a community bank than the large banks.
These small businesses provide employment and earnings fueling a strong local economy. Not to mention, there's also the more than 700,000 jobs for people who work at local community banks and credit unions themselves. Plus, every savings account or home equity line of credit opened locally keeps those resources in the community.
By banking locally, you are supporting the community cash flow and the keeping local dollars local.
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.
Check who's sponsoring your local high school team or who has contributed to the annual summer barbecue. Community banks and credit unions put their resources into the community. Every bank branch and all the credit union locations offer resources within their communities. From scholarships and financial literacy to helping finance local investment, they are involved in the community's well-being.
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? Banking relationships built on the human connections within your community are not only their business model, they also share your values.
Working with someone who actually understands your financial goals versus a faceless conversation run through a random global call center makes a difference, and maybe not every day, but when you need it most. (In fact, of the all the top ten 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, help you open a health savings account (HSA), or work with you to get the personal loan for your specific needs.
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 guarantees. That means a federal government agency insures your deposits up to $250,000. It doesn't matter if your bank at a megabank or the bank at the corner of your street — those guarantees are the same.
Megabanks, community banks, credit unions, are all subject to federal security standards and safety protocols. Any financial institution has to meet rigorous compliance standards. Their online banking website or mobile banking app provide you access to your funds.
You have the ability to speak to a financial advisor in person if you need assistance, knowing the privacy policies are certainly more focused on you and your needs. The far-removed, the high-risk Wall Street headlines remind us that 'too-big-to-fail' megabanks may have the size, but not the substance of your community branch.
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. Consider Wells Fargo was forced to pay a $3 billion settlement after opening fake accounts in their customers names to hit aggressive sales growth quotas — that's not how to build trust.
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. Today, hundreds of local banks and credit unions let you earn rewards (as in cash) as part of your checking account.
At Kasasa, we only partner with local financial institutions because we know how much a local bank near you makes every community stronger. 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 can expect to find where you live.
BONUS: Know these top 3 rewards to look for at your local community bank or credit union.
Let's face it, there are far more than five reasons to bank locally. For example, competitive interest rate. Instead of letting it just sit there like it does in most checking accounts, your money can earn money. A slightly higher annual percentage yield (APY) means the more money you keep in your account (up to a certain cap), the more money you can earn. And right now, who doesn't want to earn a little more.
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 reward for using your debit card for the items you purchase every day, like a tank of gas or a cart of groceries.
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 different ATMs. So you can grab cash where you may be.
So whether you're a community leader or small business owner — or simply shopping around for new financial home — be sure to look local first.