Sometimes looking into opening an account or accounts in banks can be confusing. There are so many types of banks and bank accounts in the USA! Which banks are right for you to open an account in? Which types of accounts should you open? Below are some simple explanations of several types of banks and the accounts you can open.
There are many types of Banks in the USA:
1. Savings Banks – these banks can also be called “Thrifts”, and are businesses that are for-profit. Savings Banks take deposits of money, invest that money, and pay the depositor interest out of the money made from those investments. Some Savings Banks give credit to depositors.
2. Credit Unions – these banks are non-profit financial institutions. A Credit Union is owned and controlled by those doing business there. Membership is needed to get into a Credit Union, normally determined by where the person works, their location, or possibly where the go to church.
3. Commercial Banks – these banks used to only deal with businesses, but have extended their services to individuals. Commercial banks offer individuals most of the same services as other types of banks.
4. Community Banks – these banks usually provide savings accounts. Money deposited into these banks is then loaned out to local residents in the community, normally for home loans because they are the safest loans and the home provides very good quality collateral.
5. Investment Banks – these banks do just what the name says…they invest. Investment Banks buy and sell stocks and bonds and give investment advice to its clients. These banks do not accept deposits, make loans, and are not insured by the FDIC (Federal Deposit Insurance Company). Continue reading