Community banks and credit unions are embedded in local communities, rely on strong customer relationships, and understand the needs of local people, businesses, and markets. Here are four great reasons to bank local (adapted with gratitude from the Institute for Local Self-Reliance).
1. You’ll get the same great services for lower costs.
Most locally owned banks and credit unions offer the same services at lower costs than big banks. According to national data, smaller banks offer lower average fees, better interest rates, and better terms on credit cards and other loans. They opened to serve local residents and businesses, providing services that people otherwise wouldn’t have been able to access. And they’re staffed by people from the community, which results in personalized attention.
2. Your money will be put to work supporting the local economy.
Small businesses depend on local banks for financing, especially in moments of crisis. Consider this:
- In 2018, community-based financial institutions made 52% of all small business loans nationwide, even though they controlled only 16% of total banking assets. Giant banks, which controlled 59% of bank assets, made up just 27% of small business lending. (Source: ISLR)
- During the pandemic, local banks distributed PPP funds to small businesses more quickly and more equitably. Community banks made 60% of all Paycheck Protection Program (PPP) loans—including 72% of PPP loans to minority-owned businesses. (Source: ICBA)
3. Like you, local banks are invested in the prosperity of the local economy and community.
Big banks are not connected to the places where they operate, and they often use a community’s deposits to make investments in other places. Local banks prosper when local communities prosper.
Small, local banks and credit unions want to turn deposits into loans and other productive investments. Big banks devote a sizeable share of their resources to Wall Street bets that may generate big profits for the bank but offer little economic or social value for the rest of us. And as we’ve seen, if they go bad they put the entire financial system at risk.
4. Decisions will be made locally.
At local banks and credit unions, loan approvals and other key decisions are made by people who live in the community, have relationships with their customers, and understand the local needs. Because of this, they often approve small business loans that big banks would reject. Even better: at credit unions, control rests with the customers, who are also the owners.