Types Of Banks And Bank Accounts -- The Condensed Guide


It can be quite befuddling to consider what type account or accounts to open in the bank of your choice. Oh, the humanity...look at all those different types of banks and bank accounts! So what would be the right bank or bank account to open? Which of the many types of accounts is right for your needs? Below are some simple explanations of several types of banks and the accounts you can open. For sure you will find the right one!

You can choose from different types of banks.

Savings Banks. A Savings Bank is commonly known as a Thrift, and is a for-profit type of organisation. Savings Banks operate by accepting a monetary deposit, investing said money deposited and finally, paying interest to the depositor, culled from the money that has been generated from the investments. Some Savings Banks give credit to depositors.

Credit Unions. These banks are non-profit financial institutions. This type of bank is owned and controlled by the people who have an interest in the Union. 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.

Commercial Banks. These banks used to only deal with businesses, but have extended their services to individuals. Individuals would usually be afforded the same privileges they would get from the other types of banks.

Savings & Loans. As the name implies, these banks specialize in savings accounts. Money deposited into these banks is then loaned out to local residents in the community, normally for home loans.

Investment Banks. Of course, these banks are all about one thing...surprise, it's investment! Investment Banks not only buy and sell stocks and bonds, they also proffer advice on investment to their clients. These banks do not accept deposits, make loans, and are not insured by the FDIC (Federal Deposit Insurance Company).

There are many kinds of accounts.

Savings account. This is an account type so ubiquitous even small children know what it entails. Simply put, you deposit funds into the savings account, and based on that deposit amount and the APR (Annual Percentage Rate), you will earn interest.

Checking account. Under this type of account, you can deposit money, withdraw it or write a cheque to cover a bill payment or purchase. Many banks now offer ATM or debit cards along with the standard checkbook when you open a checking account.

Certificate of Deposit. Now this type of account, also referred to as CD, is only for the purpose of depositing money. There would be a stipulated length of time, as short as six months or as long as a good few years in which you are not allowed to touch the money you have deposited into the CD, and over this time frame you will earn guaranteed interest. It would be possible, though, to withdraw the money before the date agreed upon depositing, but most banks will charge a fee.

Money Market account. This type of account is similar to a savings account. The interest rate of these Money Market accounts is normally higher than most savings accounts but again, a caveat -- you would need to deposit a minimum balance of $10,000 in most cases!

To wit, these are the primary types of banks and accounts you can choose from. Now it's up to YOU to find the bank that would fulfill your needs the best.

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