Believe it or not, the type of financial institution you use can have an important impact on your economic wellbeing. While you may know that there are advantages in shopping around for the best terms offered by banks and credit unions, you may not realize that there are advantages in doing business with locally-owned institutions. While most people overlook smaller community banks and credit unions, these institutions may offer the most favorable benefits.
A Deeper Level of Personalized Service
Smaller, locally-owned banks provide a more personalized service than larger corporate institutions, partly because a smaller bank will have fewer customers. This makes them more motivated to get to know each customer personally and to strive to meet individual needs. Smaller credit unions and banks also offer traditional incentives that larger banks have abandoned. When you do business with a community bank, you may receive gift certificates, small appliances, or other incentives for trying a new financial product.
You Will Feel Valued
Locally owned banks and credit unions offer more complimentary services as well. When you stop in to take care of your banking business, you may be greeted with a warm cup of coffee, a bag of popcorn, or fresh mints. While these services may not affect your financial status, they do help you feel more welcome and appreciated. A welcoming smile and a few creature comforts will brighten your mood and help you feel at home, while you’re in the bank or credit union office.
Pay Lower Fees
Most community banks and credit unions try to limit the fees they charge, so you probably won’t be paying as many fees. They may do away with maintenance fees altogether in some cases. Additionally, the fees they do charge are often lower than the similar fees you would pay at larger corporate banks. For instance, overdraft fees are often lower and community banks often reimburse customers for using out-of-network ATM machines. Fewer fees can be reason enough to switch to locally owned banks, because these fees often add up quickly.
Better Borrowing Power
In many cases, it’s often easier to get approved for a loan with favorable terms, when you borrow from a locally owned institution. Even if you have been declined by large lending businesses, a community credit union or bank may offer you a loan and with a decent interest rate. From farm loans to business loans, community banks and credit unions hold more than 46% of the outstanding loans, according to statistics filed by the FDIC.
Better Customer Service
Finally, it’s easier to get quality customer service with a community institution, particularly in resolving errors. Larger banks have many levels, making it more complex to get even a simple matter resolved. Conversely, a small, locally owned credit union may only need the approval of an on-site manager. This is one reason locally owned banks have a higher approval rating than many corporate banks.
While larger banks have the resources to compete more effectively, locally owned banks can provide more value in the long term. Whether you’re looking for more affordable financial products or you just value the intimate setting of a smaller bank, using a locally owned bank for your needs may turn out to be preferable. You can depend on better service that will help you build a long-term relationship with a bank or credit union that has a vested interest in the success of your community.
Sources:
BankRate.com: https://www.bankrate.com/banking/community-banks-vs-big-banks/
D.L. Evans: https://www.dlevans.com/about-us/our-history.html
Amiba.net: https://www.amiba.net/resources/why-bank-independent/