Deciding on the bank you would use for your banking activities requires careful examination of the types of banks available. The basic types of bank you could decide to work with are: big banks, online banks, or local community banks. Working with each of the aforementioned banks has its own advantages and disadvantages. But what are some of the reason to bank with community bank.
Some basic reason to bank with community bank are:
- Developing personal relationship
Local community banks operate in accordance to a relationship based approach. Therefore, you could enjoy higher degree of personal relationship with your local bank. Especially if you take into consideration that your local bank is serving the local community.
- Lower fees when banking with local banks
Fee wise it would be a smart decision to bank with local community banks. Meaning that community banks charge lower fees compared to big banks. Not only community banks charge lower fees, they could also offer free-checking accounts. In terms of fees community banks can charge lower overdrafts fees. In addition, the minimum balance requirement can be lower, so you could avoid paying checking fees with less money on your account.
Moreover, when you bank with community banks you may have the opportunity to enjoy interest rate benefits. This is in a sense that community banks can charge lower interest rate on loans and/or pay higher interest rate on savings account.
- Higher degree of lending flexibility
Because of the relationship base approach community banks have higher degree of flexibility when it comes to their lending procedures and practices. Because of their organizational structure big banks have higher level of bureaucracy. This bureaucracy can result in lack of flexibility when it comes to offering their services. The procedures and lending practices should be followed as defined. While this is not the case with local banks. They are able to make necessary modification if needed in accordance to the client needs. Remember that community banks are serving the local community, thus they can easily adapt to changes in local preferences. Hence, they have higher level of flexibility.
- Banking with your local bank to support your community
Social and economic development and support of local community is primary goal of every community. Thus when banking with community bank you are supporting the local development. Local business need financing which is provided by banks. When banking with your local bank you enable the bank to accumulate enough capital for the purpose of financing local businesses. Meaning that the money stays within the community and they are lent to local entities. On the other hand, banking with big bank could mean that the bank is directing the capital from regions with high level of deposits towards regions with lower deposit base. So, the bank could use the capital from your community to
If you are type of person attracted by personal approach then maybe you should bank with community bank. You want get much of a personal touch if you bank with big banks. Big banks usually have corporate structure leading to high bureaucracy level. Choosing to bank with community bank means that you will be supporting your local community and local development. Keep in mind that you can switch to another bank at any time you want. It is important though, that the decision to change your bank is because of a right reason.