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Lifestyle

Consider Depositing Your Money in a Local Bank

Having a bank account (or two) is a mundane yet essential part of adult life. At some point, you receive your first paycheck and need a place to deposit it, so you open a bank account. Typically, our focus when choosing a bank revolves around finding the best interest rates and lowest fees, often leading us to opt for a large national bank.

National banks offer convenience—they’re accessible at all times, provide a wide array of services, and allow for managing finances via mobile apps. However, smaller local banks (defined by the FDIC as banks with less than $1 billion in assets) offer distinct advantages beyond their size.

Lower Rates and Fees

Banking fees can add up quickly, from ATM charges to overdraft fees, making it feel like you’re paying to store your money. Local banks generally impose lower fees, with the Consumer Financial Protection Bureau reporting that overdraft fees at smaller banks can be up to 19% lower than those at larger banks. Additionally, interest rates on credit cards and loans are typically 8-10 points lower at local banks, and annual fees are less common, resulting in significant savings annually.

Superior Service

Big banks often lack personal connection—you might find yourself dealing with account closures without explanation or navigating frustrating phone menus for customer service. In contrast, local banks offer more personalized service, often providing face-to-face interactions when needed. This personal touch contributes to higher customer satisfaction ratings, with local banks averaging a 74% satisfaction rate compared to 56% for larger banks and 40% for online banks.

Community Benefits

Local banks are integral parts of their communities, prioritizing investments that benefit local businesses and residents. They focus on “relationship banking,” considering factors beyond credit scores when extending loans, such as your history with the bank and the potential community impact. This approach not only makes borrowing easier but also tends to result in lower interest rates. Moreover, local banks play a significant role in financing small businesses, thereby stimulating local economies and fostering community growth.

In summary, while national banks offer convenience, local banks stand out with lower fees, personalized service, and a commitment to community investment—a compelling choice for those seeking financial services that align with their values and benefit their local area.

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