07/12/2010 04:31 pm ET | Updated May 25, 2011

Move Your Money to Your Local Bank? Maybe Not Yet

In the last year, some progressives have campaigned for consumers to move their money from big banks to local community banks. Like most people disappointed with the actions of the big banks, I closed some of my accounts with the big banks and I opened an account with a small local bank here in Morgantown, WV. This bank has only 16 branches. I erroneously believed that just because it was a local bank, it was lending to the local community at equitable rates and was interested in the local people who bank with them. In all my transactions with the bank, I avoided the use of the drive through window. I went into the bank where I could have a face to face conversation with the tellers and staff. I did wire transfers regularly in and out of my account and was surprised when every single time, the lady I did transfers with kept asking me, "Have you done a transfer here before?" Either she didn't care about me as a customer, which would be surprising given that I maintained a healthy account with the bank. Or, she was just being rude to me, and probably other people as well. I had done nothing to deserve that treatment. My big bank, Charles Schwab, has been more customer friendly than my local bank whose doors I walk through once a week.

I closed my account with my local bank last week and I have opened an account with PNC Bank, a regional bank. I closed my account not because of one rude staff lady at my local bank but because of their lending terms which I believe exploit the poor. Last month, I was looking at financing a car. I received an excellent finance rate from a national bank and I decided to visit my local bank believing I'd get a better rate. I thought should the rate the bank give me be within one percent of the finance rate I had received from the national bank, I was going to go with the local bank given that the money would stay in the community. I was shocked when the lady at the finance desk told me, "Our auto loans for new cars begin at 3.9 percent and for used cars begin at 12 percent. Wow! 12%? I asked the lady if the bank would match the offer I'd received from the national bank and she flatly said no without even considering the offer.

I've spent the last month thinking about this encounter with my local bank. West Virginia is a poor state. Most people who buy cars are buying used cars. Most of these people rely on their local bank for financing. At 12 percent financing, keep in mind that is the starting rate, a consumer would pay $1,200 in the first year for a car financed at $10,000. How is this helping the local community? The actions of my local bank have not cast them in any of a more positive light than the big monster banks. This week, I received a letter in the mail captioned "Final Notice." It was a letter whose sole purpose was to trick me and other unsuspecting customers to authorize the bank to cover overdraft purchases. In return, the customer would be charged $36 per overdraft. This is a loophole from a law that came into effect July 1st preventing banks from automatically enrolling customers in overdraft protection. Banks made over $30 billion last year from overdraft fees. This isn't protection. It's exploitation. If you accept this tricky and sneaky offer, you might pay a $36 fee for a $3 cup of coffee if you aren't monitoring your expenses.

While there may be local banks that are truly interested in building up their communities, we should not be deceived that just because it is a local bank, it is good for the community. As consumers, we must carefully access every bank on its own merits. I will stay with the big banks right now, at least until I'm confident that the local banks in my community are doing the right thing in serving local people.

What are your own experiences of your local bank?