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CynthiaAnnF/Getty Images October 13, 2022 Karen Bennett is a consumer banking reporter at Bankrate. She uses her finance writing background to help readers learn more about savings and checking accounts, CDs, and other financial matters. Brian Beers is the managing editor for the Wealth team at Bankrate. He oversees editorial coverage of banking, investing, the economy and all things money. Bankrate logo The Bankrate promise
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Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our banking reporters and editors focus on the points consumers care about most — the best banks, latest rates, different types of accounts, money-saving tips and more — so you can feel confident as you’re managing your money. Bankrate logo Editorial integrity
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You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Community banks offer products such as savings accounts and loans primarily to those who reside in the neighborhood where the bank is located. These banks are often known for providing friendlier, more personalized service than larger, national banks. Since many areas of the U.S. are not served by larger banks, community banks often play a vital role in to consumers and businesses, according to the Federal Deposit Insurance Corporation (FDIC). Whether a community bank is right for you may depend on the type of products and services you’re seeking. Here are the pros and cons of community banks. What is a community bank
Community banks are commonly defined as individual banks that have less than , while community banking organizations generally are those with under . There were 4,750 community banks in the U.S. with more than 29,000 branches in 2019, according to the latest FDIC data. Since community banks are often privately owned, they tend to focus on their communities’ interests rather than capital market demands, according to the FDIC. Pros of community banks
Personalized service: Community banks are commonly owned and managed by people who live near the bank. As such, bank employees may have long-standing friendships with customers and be able to provide more personalized service. Local investment: A bank’s focus on giving loans to those in its own community helps local businesses and residents thrive. Relationship banking: Community bank officers may take into account discretionary spending and family history when making loans, rather than relying solely on impersonal data like credit scores, according to the (ICBA). Community service commitment: Like other local businesses, neighborhood banks often give back to their community through volunteer work and supporting local charitable organizations. Lower fees: Some community banks charge lower fees than national banks. For instance, fees for overdrafts and nonsufficient funds (NSF) are 13-19 percent lower at small banks and credit unions than at large banks, according to a 2021 report from the . Cons of community banks
Limited number of products and services: While community banks typically offer deposit products and loans, they might not have some of the specialized products more commonly offered by big banks such as credit cards and investment services. Fewer branches and ATMs: Unlike national banks, you’re less likely to have access to a branch when traveling, and the network of ATMs may be limited. However, some banks reimburse their customers for fees associated with out-of-network ATM use. Less robust digital banking: The digital banking offerings of community banks may be less sophisticated than those of national banks. Smaller banks may also have fewer resources to devote to the security of their digital banking systems. Deciding between a community bank and a national bank
A community bank may be worth considering if you prefer to use a financial institution run by people who live in your community, as well as one that focuses on providing deposit products and loans to local residents. It’s also a good option for those who prefer a bank that invests time and resources in local charities. A big bank may be a better option for those who are seeking a larger network of branches, a more robust mobile app and a fuller suite of products and services. How to find a community bank
Community banks commonly advertise, so keep an eye out for their ads around town or in your local newspaper. Since they often sponsor community events, you may also see their name on signs and banners. You can also near you on the ICBA website. Bottom line
Community banks offer an array of unique benefits and are often sought out by consumers who prefer a more personalized banking experience. They often contribute to their communities by supporting various neighborhood initiatives and charitable organizations. In all, they play a vital role in providing local banking services, including in areas that otherwise would not offer a bank branch. SHARE: Karen Bennett is a consumer banking reporter at Bankrate. She uses her finance writing background to help readers learn more about savings and checking accounts, CDs, and other financial matters. Brian Beers is the managing editor for the Wealth team at Bankrate. He oversees editorial coverage of banking, investing, the economy and all things money. Related Articles