Is Local Bank Safe?

When it came to choose bank, we are often confuse. It is normal as we are going to keep our savings in banks. Mostly people chooses big as they are greatly popularize by the persons. But choosing local banks is not a bad decision at all.

Should I Bank Locally?

Banking is ultimately a choose-your-own experience.

There are several options out there, each with distinct perks.

Think about what your want out of your banking experience. What do you prefer: a bank that serves its local community or a bank with a national presence? Once you determine your priorities, you can look for institutions closest to you and make your decision.

Types of Local Bank

minority-owned bank is define by the FDIC as owned by African Americans, Asian Americans, Hispanic Americans, or Native Americans; or has a majority of board directors and community members from these groups. The FDIC keeps a list of federally insured minority-owned through its Minority Depository Institutions Program.

Minority-owned credit unions need to have a majority of members, board of directors, and community members that are African American, Asian American, Hispanic American, or Native American. The NCUA has a database of federally insured minority-owned credit unions.

Community banks are part of a broader category of local and regional banks. According to the FDIC, community will have less than $1 billion in assets; loan assets make up less than 33% of total assets, and main deposits are equal to or less than 50% of total assets. Community banks also have to operate in a limited area.

Last but not least, CDFIs are nonprofits, banks, and credit unions that are -driven institutions that serve disadvantaged communities. Some CDFIs are also minority-own credit unions or banks. For a full list of CDFIs, you can view this list created by the Community Development Financial Institution Fund, which certifies CDFIs.

Pros of Local Bank

  • More personal banking experience. Because local serve a smaller community, they may address specific barriers in underserved communities, like language barriers or banking requirements.
  • More flexible lending options. Research from the FDIC shows that community are a driving force for local businesses. MDIs are also integral to providing home loans and small business loans to underserved communities, where national banks tend to fall short. 
  • Fewer fees. Local may charge fewer fees than national banks.
  • Involved with the community. Local often host or volunteer with small nonprofit organizations. Some also have college scholarship funds.

Cons of local bank

  • Local bank options vary by state. Local vary tremendously. Some might have one branch, others may have a couple in different cities. Your options will mainly depend on the state you live in. 
  • Smaller branch presence. Local banks are in a limited geographic area. If you need to move to a different state, you won’t be able to stay with your same bank.
  • Smaller ATM presence. Some local banks might be a part of a shared ATM network or only have a few ATMs at local branches. 
  • Limited services and products. There may be limited options when it comes to bank accounts or loans. You also may have limited customer service hours or online tools.

Are local banks safe? 

Local banks are safe banking options as long as they’re federally insure. Banks are insure by the FDIC, and credit unions are insure by the NCUA. This means that if a bank or credit union fails, money that was deposited into your account will be safe. 

The FDIC and NCUA secure up to $250,000 in accounts and $500,000 in joint accounts. A bank or credit union will have a logo at its branch or on the website if it is federally insured.