TYPES OF BANKS • 4 Main Types • Commercial Bank • Mutual Savings Banks • Savings and Loans • Credit Union What banks can we think of that fit in these categories?
COMMERCIAL BANKS - FINANCIAL INSTITUTIONS OWNED BY SHAREHOLDERS AND OPERATED FOR THEIR PROFIT An institution which accepts deposits, makes business loans, and offers related services. Commercial banks also allow for a variety of deposit accounts, such as checking, savings, and time deposit. These institutions are run to make a profit and owned by a group of individuals, yet some may be members of the Federal Reserve System. While commercial banks offer services to individuals, they are primarily concerned with receiving deposits and lending to businesses. http://www.citibank.com/us/d.htm http://en.wikipedia.org/wiki/Citibank
Mutual Savings Bank - state chartered financial institutions operated by trustees for the benefit of depositors. Profits are either paid to depositors as interest or held in reserve. http://www.firstfedsavingsbank.com/
Savings and Loan • Financial institutions that originally specialized in providing funds to home buyers, but now provide a variety of financial services • Some are owned by shareholders and operated for profit, but many are owned by their depositors. • http://en.wikipedia.org/wiki/Savings_and_loan_association • http://www.washingtonsavings.net/
CREDIT UNION • NON – PROFIT FINANCIAL INSTITUTION OWNED BY ITS MEMBERS. THE MEMBERS HAVE A COMMON MOND, SUCH AS WORKING FOR A CERTAIN EMPLOYER, BELONGING TO A LABOR UNION, OR LIVING IN A CERTAIN REGION • http://www.bcu.org/
Internet only Bank • Initial thoughts about this idea? • These banking institutions operate only over the internet. They don’t have branches or teller, but they operate very efficiently. They are able to pass savings on to their customers. • What does this mean for its customers? • Typically offered higher interest rates • http://www.bankofinternet.com/
Which bank is better? Comparison: • Deposit Insurance • FDIC (Federal Deposit Insurance Corporation) insures savings, checking, and other deposits in most banking institutions. • Services and Convenient Access • You must match the services you need with what the bank offers. • Locations • Phone Service / Internet • Fees • Tellers • Specialists
Electronic Banking – sweet! • This is possible through a concept called electronic funds transfer • Movement of funds electronically – duh! • Increases speed and correctness of transactions • Reduces the need for human interaction • Allows for personal access (internet / phone)
ATM – the money tree! • ATM • Automated Teller Machine • Almost everywhere! • Why is this scary? • Always have access to your money • Most ATM’s are not protected • CASH! • PIN number
Debit Cards • Debit Cards • ATM cards which allows the owner to pay for items just like paying with cash • Typically must enter pin number to complete transaction • Point of sale transaction • Paying for an tem by making an electronic funds transfer • Good or bad? For who? • Store – good…. No more bad checks? • Consumer – good… don’t have to carry checkbook • Consumer – bad… have to manage account balance
Automated Services • Direct Deposit • Give me my money faster! • Automated Transfers • Move money when you need to! • Automated Loan Payments • Make sure you never miss a payment • Automated Payments to a third party • Save money on checks • Save time on payment process • Ensure no late payments • Keep credit score high • Travel and maintain your payments!!!