Back to top Jump to featured resources
Resource filed under Banking

Top 5 Reasons to Choose a Community Bank or Credit Union

| Written by Stacy Mitchell | 11 Comments | Updated on Jun 30, 2010 The content that follows was originally published on the Institute for Local Self-Reliance website at


1. Get the Same Services at Lower Cost

Most locally owned banks and credit unions offer the same array of services, from online bill paying to debit and credit cards, at much lower cost than big banks. Average fees at small banks and credit unions are substantially lower than at big banks, according to national data. Studies show that small financial institutions also offer, on average, better interest rates on savings and better terms on credit cards and other loans.

2. Put Your Money to Work Growing Your Local Economy

Small businesses, which create the majority of new jobs, depend heavily on small, local banks for financing. Although small and mid-sized banks control less than one-quarter of all bank assets, they account for more than half of all small business lending. Big banks, meanwhile, allocate relatively little of their resources to small businesses. The largest 20 banks, which now control 57 percent of all bank assets, devote only 18 percent of their commercial loan portfolios to small business.

3. Keep Decision-Making Local

At local banks and credit unions, loan approvals and other key decisions are made locally by people who live in the community, have face-to-face relationships with their customers, and understand local needs. Because of this personal knowledge, local financial institutions are often able to approve small business and other loans that big banks would reject. In the case of credit unions, control ultimately rests with the customers, who are also member- owners.

4. Back Institutions that Share a Commitment to Your Community

The fortunes of local banks and credit unions are intimately tied to the fortunes of their local communities. The more the community prospers, the more the local bank benefits. This is why many local banks and credit unions are involved in their communities. Big banks, in contrast, are not tethered to the places where they operate. Indeed, they often use a community’s deposits to make investments in other regions or on Wall Street.

5. Support Productive Investment, Not Gambling

The primary activity of almost all small banks and credit unions is to turn deposits into loans and other productive investments. Meanwhile, big banks devote a sizeable share of their resources to speculative trading and other Wall Street bets that may generate big profits for the bank, but provide little economic or social value for the rest of us and can put the entire financial system at risk if they go bad.

Download this page as a flyer you can distribute. 


Tags: / /

About Stacy Mitchell

Stacy Mitchell is co-director of the Institute for Local Self-Reliance, and directs its Community-Scaled Economy Initiative, which produces research and analysis, and partners with a range of allies to design and implement policies that curb economic consolidation and strengthen community-rooted enterprise.  She is the author of Big-Box Swindle and also produces a popular monthly newsletter, the Hometown Advantage Bulletin.  Connect with her on twitter and catch her TEDx Talk: Why We Can’t Shop Our Way to a Better Economy. More

Contact Stacy   |   View all articles by Stacy Mitchell

  • Rich Gallati

    Excellent work

  • Ty

    Nice message Stacy and in a world with so much financial uncertainty having your money in local credit unions are the safest option if you’re trusting the banks with your money. All fiat currencies come to an end so everybody that has a retirement – think of safer option for the next phase of this economic slowdown.

  • Jack Barrett

    Thanks for your research Stacey. Bottom line is the mega banks are the riskiest while the credit unions the least experienced when it comes to meeting needs of small business. This is best evidenced by your loan loss chart.

    Also, why should a low income family of four making $25,000 annually pay more taxes than a $10 billion credit union. Tha just answer is they shouldn’t and Congress needs to pray for the courage to end the loopholes immediately.

  • Pingback: Speed Dating with your Local Banks & Credit Unions | Local First Arizona News & Events()

  • Pingback: How to Make the Switch to a Local Bank or Credit Union in Three Easy Steps | Local First Arizona News & Events()

  • Pingback: Poll: Large Majority of Americans Prefer Community Banks | Local First Arizona News & Events()

  • Pingback: Institute for Local Self-Reliance Releases Results from Independent Business Survey | Local First Arizona News & Events()

  • Pingback: Community Capital to Grow Local Economies()

  • Pingback: 94 Creative Ways to Save Money Today - Perfect Your Lifestyle()

  • Therapist Beverly Hills

    I have an account with a credit union and another with a major branch. I have to say that my credit union is more helpful and because they’re not a commercial bank, fees are reasonable, and the rates are better. The only downfall is that the branches and ATMs are limited in locations. Now that society is looking for extra ways to make or keep money, why don’t they switch to a credit union? Is the ease of banking more important than service and fees?

  • Brittany L.

    Hi there .. I moved my money out of Chase (after WaMu was bought by them) over a year ago .. The banking itself was unpleasant and impersonal, and I began learning of all the ways big banks use our money for things like fracking and funding wars – things I was previously unaware of. I recently moved to a new state (NJ) and I’m looking for a new bank or credit union, and just stumbled across your site through the MYM project .. I love it so far and was wondering if you can direct me to more specific information on how banks are spending their money .. So far I’ve found a lot of info like the above (5 reasons to choose a community bank or credit union) but nothing more. Also, these larger issues seem like a good thing to add to the list! Thanks in advance, and for the work you’re doing:)

    Brittany L.