Banking has existed since the first time a person exchanged one good or service for another. Banks offer a wide variety of financial services as well as other operations that are necessary for running an effective economy. Financial institutions such as banks facilitate lending and borrowing, allow people to invest and save money, and help with the circulation of currency from businesses to consumers. Banking is one of the most significant and important aspects of our lives. It's what allows us to carry out day-to-day transactions as we live our lives. When it comes to banking, there are so many things that are important. However, banking has never been better than it is today because everything is handled digitally by banks. Banking is more than just storing money. Banks provide financial services such as loans and mortgages that help people save, manage, invest and grow their money. From the trusty old-fashioned local bank branch to online-only options, banking services are available to suit everyone's needs. Ultimately, it is up to you which type of service you choose.
Banking is the business of protecting money for others. Banks lend this money, generating interest that creates profits for the bank and its customers. Banks have been around for centuries, and their basic structure hasn't changed much — except for the tellers. Banks are institutions that hold and move money on behalf of their customers. If a person or business needs cash or its equivalent, banks are ready to give it to them. Banks are financial institutions that provide the public with deposit and lending services. Banks are usually privately owned, and usually have single or multiple locations. Banks often accept cash or other security deposits, which are kept in safes or vaults at the bank. Banks usually have ATMs or machines that allow customers to deposit, withdraw and transfer money, via bills of exchange called cheques.
The range of general banking services and products is diverse, with different types of banks offering a unique range of services tailored to their consumers. Banks offer a wide variety of general banking services to their customers, these include; checking and savings accounts, loans, and credit cards. Although the type of bank varies, most general services provided by banks are similar and include online account opening and management services, online statements, online payment options, and fraud management. Let’s discuss some of these services in detail:
The first thing that most people think of when they think of a bank is that it offers a checking account. Many other services also came from banks but checking accounts tie it all together. They are essentially the link between you and your finances — providing much more flexibility for your money. Checking accounts is a useful, everyday bank service. With a checking account, you can deposit checks, receive direct deposits, pay bills, and also withdraw cash from an ATM or make purchases anywhere that accepts debit cards.
Certificates of deposit, or CDs, are one of the primary ways banks offer investment opportunities. Certificates of deposit are bank investment accounts that allow you to put money in a specific account for a certain amount of time. The special kind of bank account offers you higher interest rates in exchange for locking up your money for a certain amount of time. These accounts may be a good addition to an otherwise simple savings plan. While these accounts typically offer higher interest rates than a standard savings account, it's important to know the pros and cons before investing in CDs.
One of the most popular services that a bank offers is a savings account. Savings accounts are bank accounts that, as the name suggests, can be used to store your savings. A savings account will pay you interest on the amount of money in it and makes it easy to access your money. If you have ever considered opening up an account at a local bank, you may have thought about possible features the account might offer. One of these features is a savings account. In this feature, the account holder can deposit their money into the account and set up rules for accessing it.
Consumer banks provide several types of loans for their customers. Personal loans are used for unexpected expenses and include plans such as unsecured personal loans, guaranteed personal loans, and secured personal loans. Auto loans are used to purchase or lease a vehicle, while home equity loans provide consumers with additional funds to be used towards home improvement or other projects. Personal lines of credit also function as a loan for individuals and are used to cover a variety of overhead expenses.
Debit cards are one of several types of accounts offered by banks. These cards access the money in your checking or savings account and let you make purchases or withdraw cash using ATM machines. Some debit cards offer rewards programs, such as cashback incentives when making purchases with the card. Debit cards are definitely the way to go when it comes to paying for things at a business. They're more convenient than carrying cash, and most businesses will allow you to overdraw your account, so you can use the card at nearly any store. A big minus would be if you lost your debit card. If a criminal has your debit card and you don't let your bank know right away, they could easily take out more money than you have available, creating a pretty big debt that you'll need to cover.
A credit card gives you an easy way to make purchases on a credit line. It's like your own set of cash that you are allowed to spend up to a certain amount. You can use your card anywhere you see the MasterCard, Visa, or American Express logos without having to carry cash or checks. Banks also issue rewards cards with cashback and discounts to entice you to use them. A credit card allows you to borrow money for business and personal purchases until your next payment is due. You can obtain a credit card with a lower income because the bank assumes you will pay off the balance each month. Credit cards can also be used in an emergency situation or to meet unforeseen expenses.
Just like each individual is unique, so are the banks available to them. Some banks focus on specific groups of consumers, such as those who have a high net worth or who are self-employed. Other banks serve many different types of individuals and businesses and offer multiple services like checking accounts and investment accounts.
As new banks spring up, the banking landscape has become more congested and further fragmented. This makes it difficult to decide which bank is right for you as a consumer or business owner. However, there are several types of banks that are well known for their specific niche that can make it much easier to find a bank you'll feel comfortable using in your daily financial endeavors. Here's a list of some of the most common types of banks and recommendations from top-rated personal banks around the nation.
Retail or consumer banks are those that offer banking services to the general public. These banks do not specialize in business banking and focus on serving individuals, nonprofits, and small to medium-sized businesses. These banks offer services such as savings and checking accounts, along with consumer loans — such as home loans, auto loans, and student loans. Today's consumer banks provide a wide range of services and products. That's why some people refer to them as retail banks — because consumer banking is all about serving the consumer, or retail, marketplace. Bank of America is one of the most popular retail or consumer banks around the U.S.
Commercial Banks offer a number of products and services to business owners, managers, and entrepreneurs, making them one of the most important types of banks. Commercial Banks are also called industrial or business banks because they typically serve small- to medium-sized businesses. The term commercial banks refer to a group of financial institutions that are primarily concerned with the financial services needs of business and institutional clients. A bank or department within a bank that focuses on such clients is commonly known as a commercial or business bank. The term commercial banks also describe an older banking system that was established by the Federal Reserve system.
Thrift and loan associations, often called S&Ls or savings and loan associations, are federally regulated financial institutions. They can be any type of corporation with the word "savings" in its name. There are associations as well as banks. Savings and loan associations have traditionally been part of the deeper needs of a community such as helping people become homeowners or providing loans to people who may have otherwise hit a dead end with other types of commercial accounts. Today, S&Ls provide numerous financial services for individuals and businesses looking for competitive interest rates and convenient ways to manage their finances.
Credit unions are similar to banks and savings and loans in many ways. For example, like banks and S&Ls, credit unions can take deposits, issue checking accounts and savings accounts and make consumer and commercial loans. But unlike most banks that strive to make a profit for shareholders, credit unions are not-for-profit institutions that accept deposits and make loans. They are owned by their members, passing any earnings back to their membership instead of shareholders. Credit unions offer so much more than a regular bank, like lower fees and better returns, and are often touted as being more accountable to the members that own them.
Community development banks are smaller than commercial banks and focus on their local community. They're designed for underserved communities and are often created to provide financial services as well as loans. Their main role is to encourage economic growth in these areas by offering small businesses the opportunity to get a loan or capital they wouldn't be able to get anywhere else.
Investment banks provide complex financial services to their clients, such as corporations and large nonprofits. One of the most common services provided is helping a company to take their company public — starting with a process of underwriting shares (i.e. reselling the initial stock offering at a higher price for a profit) to the company's investors and ultimately allowing those investors to trade on an exchange. By definition, an investment bank is a company that helps its clients buy, sell and issue securities such as stocks and bonds. They also help corporations finance new projects.
Online banks, also known as virtual banks or “neo banks,” are a relatively new type of bank that provide e-banking services via websites and mobile apps. While traditional banks have digital services, online-only banks have no brick-and-mortar branches. This cuts overhead, allowing the online bank to pass savings to customers.
When choosing a bank for your financial needs, we’re often faced with a wealth of options. While this is great in terms of flexibility, it’s not so great when it comes to narrowing down our choices to the best fitting bank or credit union. Choosing a bank is the most important thing for you to do because it determines all your financial needs in the near future. You are bound to give your hard-earned money to a bank and you should be absolutely sure that is going to be of maximum use. There are many factors that you could consider and rely on while selecting the bank that suits you the best, such as: