Is it Better to Bank at a Local Bank?

Lynnae McCoy is a freelance writer, homeschooling mom and frugal living enthusiast. She writes about frugal living at Being Frugal.net and about balancing work and homeschooling at Freelance Homeschool Mom. When she has a rare spare moment, you can find her on Twitter.

After the banking meltdown of 2008, people became leery of big national banks. Sites like Move Your Money encouraged people to transfer their money from large banks to smaller local banks and credit unions.

It can be a real hassle to move your money from one bank to another, so before you take the plunge, make sure a local bank is right for you.

The Pros of a Local Bank

Local banks have several advantages over large national banks. The most notable advantage is customer service. While large banks are confined to the rules set forth by the corporation, smaller banks often have the ability to deal with problems on a case by case basis.

For instance, my local bank manually processes all transactions and will call the customer if the account is going to overdraft, giving the customer a chance to bring in a deposit before fees are assessed. I don’t know of any large bank that gives that kind of personal service!

Even if larger banks work with you when there’s a problem, it takes a lot longer to work your way up the chain of command at a large institution. At a small bank, the person who can help you resolve a problem is frequently in the bank itself. If not, he or she is probably in an office across town. At a large institution, you might have to talk with several people across several time zones before you reach someone who can help you out.

Local banks also support your community. There’s a sense of pride in doing business with a bank that began in your own backyard. Banking with your local bank also keeps money in your local economy longer than if you were to bank with a national bank.

The Cons of a Local Bank

Even though there are some pretty big reasons to move to a local bank, it’s not for everyone. If you travel frequently and need access to your bank while you’re on the road, it’s better to use a bank with locations across the country.

You also need to consider the financial stability of your local bank. If the only local bank in your area is on shaky financial footing, it’s best to stay with a bigger bank. Make sure you do your research before deciding.

Are Local Banks Really the Best?

My opinion is that most of the time, local banks or credit unions will give you a better banking experience than big national banks. If you have a good, stable local bank or credit union, consider making the switch! I did, and I haven’t regretted it!