Credit unions and community banks are essentially all that remains in the archaic relationship-based banking system that once ruled. These entities are small, locally owned, and rooted in their communities. They offer services to local businesses, so the money deposited with these banks are more likely to support the local economy. Unfortunately, community banks are being threatened by increasing consolidation in the banking sector and disproportionately higher capital and regulatory costs (Cortese, 2011).

There are pros and cons associated with this format. Using community banks is a low risk way to support one’s community. These banks offer a range of financial products and services, including savings and credit cards. Credit Union and other locally owned institutions tend to offer lower fees and higher interest rates on checking and savings accounts compared to larger banks. Most importantly, by doing business with locally owned banks you are investing in your community all while saving money. Cons associated with this form of banking include limited ATM networks, less (or no) access to cheap capital that big banks have and having to double check the financial health of the bank before switching to them (Cortese, 2011).


Cortese, A. (2011). Locavesting: The revolution in local investing and how to profit from it. Hoboken, NJ: J. Wiley & Sons.

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1 Comment

  1. I cannot say enough good things about our local credit union. They have helped me with most of my large financial decisions throughout my years. The only downsize is that they are specifically for employees of the state of north carolina. I don’t think they handle commercial accounts, at least not in the traditional sense. I am in the process of shopping around for a bank to use that does allow for commercial accounts so that when I start my business, I’ll have one of those business accounts to go along with it. I hadn’t actually given this much thought before, and I have realized that my credit union has sort of spoiled me with the member services they offer. I’m not sure I’m going to be able to find a local “big box” bank that will offer a similar experience, but I’m hopeful still.


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