Updated: May 22, 2023

4 Benefits of Going With a Community Bank

You may hear about the big banks more, but often it could be the local banks that offer the best services. Be sure to consider them when choosing a bank.
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There are many choices when it comes to choosing a bank. While there may be a lot more advertising and focus placed on the big banks, you may be shortchanging yourself if you overlook the benefits of patronizing your local community bank.

Everyone has their own financial habits, attitudes and goal -- a bank that’s helpful to your friends may not serve your specific needs or expectations. If you are researching a new bank, consider one that places a greater emphasis on your community.

Here are a few of the most notable perks of using a smaller, local bank:

Lower fees, higher savings rates

As banking giants bend to stricter financial regulations (and slashed benefits and raised fees), smaller banks have become more attractive. The fees for the services you already use are generally lower at a community bank and you tend to get much better customer service at your local community bank.

And, deposit rates are likely to be higher. For instance, rewards checking accounts -- which can help you survive the low-rate environment -- are most commonly found at smaller banks.

Compare services between the community bank and the big banks to see what is being offered and how much it costs. In the long term, this can have a bigger financial impact on your life than you may realize.

From the community, for the community

Big banks don’t have to cater to your small town to stay in business but community banks are typically very involved in the community in which they operate. The Community Reinvestment Act, passed in 1977, requires banks to meet the needs of borrowers in their communities -- federal regulators examine banks for compliance of this law.

Your deposits in a community bank may help support the local economy. Borrowers and small businesses in your area might rely on local banks for loans. By banking with a community bank, you play a role in the financial success of fellow neighbors and nearby businesses.

The human touch

At large national banks, you’ll find fees that are charged for live customer support. Bank of America has a checking account that discourages customers from using a branch teller for deposits and withdrawals. PNC Bank imposes a $3 fee for staff-assisted transfers.

At community banks, it is less likely you will have to pay for personalized care. Smaller community banks strive to tend to place greater value in customer service. When you have questions or problems, the community bank staff may be more inclined to help you find a solution.


Betting on you

Not surprisingly, since the financial crisis, all lenders have taken a magnifying glass to borrowers’ loan applications. With a community bank, your loan process may be a different experience than you would get with a major bank.

Many loan officers within community banks are more likely to look at your overall situation rather than just run your personal data and credit reports through a predetermined formula.

Small banks have been known to be more lenient when considering the financial needs of a borrower outside of a credit score. They may look at an individual’s overall situation rather than just their credit history. And, like better savings rates, small banks may offer better interest rates on loans.

If you’re convinced that small banks have more to offer (than the banking giants), use MyBankTracker’s bank-locator tool

to find nearby community banks.