subject: Where And Why To Bank? Your Questions Answered [print this page] Why put your money in a bank? Because you can usually earn a higher rate of return than sticking it in your mattress. Your bank in Cincinnati or Seattle generally does the same types of things depending on what your needs and wants are, so establishing what you need your bank to do for you will help you make the best choices about where to take your money. Here are some answers to some of the most popular questions about banks.
What are the Different Types of Banks?
There are multiple types of banks, and each type caters to a specific group of people, although one banking establishment can house several of these types in one place.
Retail banks are where you as an individual or small business can open a checking and savings account and take advantage of several other banking products like money market accounts. These types of banks offer loans, as well. Commercial banks are similar in style except that they cater to large businesses and corporations.
Investment banks deal with groups of people who make investments and do not accept deposits.
What Products do Retail Banks Offer?
The size and scope of products offered to general account holders isn't that great or innovative, but you can certainly enjoy checking and savings accounts; money market accounts; and all types of loans. As an account holder, you can also take advantage of debit and credit card services. Because small account holders don't make a much of a profit for banks, these types of account holders can get stuck with various fees and low savings rates, but shopping around will yield some better rates than others.
The primary role that retail banks play is in the economies where they are located. When individuals and small businesses can secure loans to buy cars, start a business, or purchase a home, that money is often put into the areas served by the bank. When times are good, banks hold a lot of the cards for economic growth and success; and when times are bad, banks will be much more tight-fisted with their cash. While it can be frustrating to be on the receiving end of a denied loan, banks that take too much risk are endangering all their account holders, and - more importantly to the bank itself - the earnings of their stockholders.
Being smart with how you bank and where you invest your money can help your money work for you. Make sure that your bank is FDIC insured.
