4 reasons to bank with a community bank


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Deciding on the bank, you would use for your banking activities requires careful examination of the types of banks available. The basic types of a 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 reasons to bank with community banks?

Some basic reasons to bank with a community bank are:

  1. Developing personal relationship

Local community banks operate in accordance with a relationship-based approach. Therefore, you could enjoy a higher degree of a personal relationship with your local bank, especially if you take into consideration that your local bank is serving the local community.

  1. 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 do community banks charge lower fees, but they could also offer free checking accounts. In terms of fees, community banks can charge lower overdraft 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 the sense that community banks can charge lower interest rates on loans and/or pay higher interest rates on a savings account.

  1. A higher degree of lending flexibility

Because of the relationship base approach, community banks have a higher degree of flexibility when it comes to their lending procedures and practices. Because of their organizational structure, big banks have a higher level of bureaucracy. This bureaucracy can result in a lack of flexibility when it comes to offering their services. The procedures and lending practices should be followed as defined. At the same time, local banks are able to make necessary modifications if needed in accordance with the client’s needs. Remember that community banks are serving the local community. Thus they can easily adapt to changes in local preferences. Hence, they have a higher level of flexibility.

  1. Banking with your local bank to support your community

Social and economic development and support of the local community is the primary goal of every community. Thus when banking with a community bank, you are supporting local development. Local businesses 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 a big bank could mean that the bank is directing the capital from regions with a high level of deposits toward regions with lower deposit bases. So, the bank could use the capital from your community to finance activities in communities on the other side of the country.

If you are the type of person attracted by personal approach, then maybe you should bank with a community bank. You won’t get much of a personal touch if you bank with big banks. Big banks usually have corporate structures leading to high bureaucracy levels. Choosing to bank with a 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 the right reason.

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