4 Common Bank Types to Consider Using for Your Finances
While it may not be readily apparent to the average customer, there are different types of banks and it’s important to understand the pros and cons of each one.
The choice of a bank is very personal and needs to match your needs, or you could even have accounts at multiple banks for different purposes.
You should consider these four common types of banks when deciding how to use your finances.
Retail Banks
Retail banks are the traditional banks that commonly come to mind.
They have brick-and-mortar operations and can be local, regional or national institutions.
Although they typically have higher fees than other alternatives, they have advantages such as convenience, a more widespread physical presence and bigger investments in technology.
You can also go in and physically talk with someone if you have a complicated issue to solve.
Investment Banks
Investment banks are financial institutions that provide investment services to members.
They typically work with large-scale trading operations but many provide services to individuals as well.
They operate as financial intermediaries for people who don’t feel comfortable making investment decisions all on their own, investing your money based on your wishes and advising you on financial matters for a fee.
Investment is one of the best ways to become financially wealthy and have money in the bank for retirement.
Credit Unions
Credit unions are similar to retail banks but have some key differences.
Credit unions are owned by their members and are non-profit, as opposed to traditional banks which are for-profit.
This typically results in them charging fewer fees and providing better customer service.
Most also operate in a network of credit unions that allows customers to access ATMs and other services without fees when they are not near a branch of their own institution.
Federal credit unions, commonly abbreviated as FCU, are regulated by the National Credit Union Association (NCUA), which insures and protects your money just like the federal government does for traditional banks.
Online Banks
Wholly online banks have risen in popularity in recent years because many people do all of their banking online anyway.
This type of bank exists solely online and has no physical branches. The advantages of online banks are that they offer free checking accounts with no minimum balance requirements.
They charge few or no fees compared to traditional banks because they have fewer expenses. Some offer loans and mortgages too.
Consumers need to understand the different types of banks so they can choose the one that best meets their financial needs.
Do some comparison shopping and consider the banks with branches in your area before making a decision.
Smarter utilization of your finances typically results in more money for you.
Category: Personal Finance
