If you weren’t among the millions of Americans who ditched their big banks last month, you might still be mulling over the thought of moving your funds elsewhere.
Local banks and credit unions aside, there’s a new startup in Europe that is taking the idea of a community bank to a new level.
With services including person-to-person lending, crowdfunding and private equity crowdfunding for startups, which sites like Kickstarter have made accessible to the masses, the company is determined to give consumers everything big banks can’t—and won’t.
The bad news is we’ll have to admire this beast of a banking centre from our side of the pond for a while—at least until private equity crowdfunding is made legal in the U.S.
If you’re looking for a community bank, however, there are still plenty of options to choose from here at home and more than half of them reported boosts in their deposits since 2009, according to Independent Community Bankers of America.
But much like credit unions have a dark side, there are some drawbacks to consider before you go emptying your piggy bank:
Awesome interest rates. Community banks and credit unions alike tend to offer better interest rates to consumers, according to Bankrate.com. By law, loan interest rates and credit card interest rates are capped at 18 per cent.
More attention for the little man. Local families, small business and farmers are the bread and butter of community bank customers. They cater to this crowd and not big business like megabanks, says the ICBA. “The community bank business model has held up well when compared with the megabank model that had to be propped up with taxpayer funding,” Federal Reserve Bank of Kansas City President Thomas Hoenig told the Wall Street Journal.
Better customer service. Bankers are bound to get to know you if you’re part of a small community of customers. Chances are you’ll get more attention and have access to a real person who can meet your needs on-site.
Flexibility in lending. Big lenders will soon start digging into your personal history before they offer loans on mortgages, but community banks often look at your family history and character when judging your risk, the ICBA says.
Lower fees. Smaller banks won’t try to stick you with a $5 debit card fee, that’s for sure. In fact, the annual cost of fees on bank checking accounts is twice as high, according to Bankrate.com.
Limited reach. If you’re big on travelling, chances are you won’t find your regional branch outside of your state. Unless your bank reimburses you for ATM withdrawal fees or offers online services (nearly all do), you’ll be out of luck when you’re out-of-state.
Shallow pockets. Community banks don’t have the funds to loan tens of millions of dollars for big enterprises or construction projects. That’s part of the reason they cater to small businesses.
Serious about fixing your finances? See 9 simple ways to get them on track >
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