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Financial Institutions – Which One Should You Use?

by Jackson B

There are many different types of financial institutions. Each financial institution has its advantages and disadvantages. You will need to decide which type of institution you want to invest your money in. The best way to invest your money is to research and compare the different institutions. You can use the Internet to help you with your research. Here are some things you should look for when researching institutions.

Traditional banks: These are the largest for-profit financial institutions, which are typically licensed by the state to get loans and even to deposit deposits. Most credit unions are non-profit organizations which are created purely to offer banking services to its members. Online banks: Online banks are not licensed by state boards and therefore the cost to do business on their website is much lower than a brick and mortar bank. They generally have lower overhead and therefore are able to pass on those savings to customers.

Choose between banks which have different service offerings. Some traditional banks only offer checking accounts, some offer savings accounts and a few offer only debit cards. Online banks have an unlimited variety of services and they are rapidly expanding their variety of services. Research and read up on all the different options available.

Central banks: Central banks are financial institutions such as the Federal Reserve Bank, The Bank of England, The Central Banks of Canada, Australia, New Zealand, and Swiss banks to name a few. Central banks do not issue loans. Rather, they control the supply of money based on the demand for it. These are some of the most widely recognized and largest financial institutions in the world.

Mortgage loans: The primary function of any financial institution is to lend money. A homeowner can use a mortgage loan to purchase a new home. Commercial banks provide mortgage loans to businesses and individuals for buying property. Individuals can obtain mortgage loans from online financial institutions as well. Individuals can take out home equity loans to purchase homes. A mortgage loan is very similar to that of a credit card, except you are essentially using your home as collateral against the loan.

Insurance companies: Financial institutions also deal with insurance companies such as auto insurance companies, mortgage companies, life insurance companies, and more. Financial institutions often own, or work with, insurance companies. Insurance companies provide insurance policies and annuities to individuals and businesses. These are some of the most recognizable financial institutions in the world. One can find insurance agents almost anywhere; however, they are mostly found in large metropolitan areas such as New York, Chicago, Los Angeles, and Houston.

Savings Accounts: Many financial institutions offer savings accounts, such as checking accounts, certificates of deposits (CDs), and even high interest savings accounts such as Money Market. There are many different types of savings accounts. Check with your local banks and find out what type of savings account best fits your needs. One thing to note is that banks often offer better rates on checking accounts and certificates of deposits than do credit unions. Most credit unions also offer other financial services, such as bill payment options, online banking, and Internet checking.

Banks vs. credit unions: When it comes to checking accounts and certificates of deposits, most financial institutions are more trustworthy than credit unions. One thing to remember is that if you decide to go with one bank over the other you will be charged a fee for using a particular service from that institution. Credit unions are usually free to join and therefore they offer better rates. One thing to keep in mind is that you should always look into the fees, interest rates, and other financial charges of both banks and credit unions before making your final decision.

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