Banking Terms 101: A Comprehensive Guide

Banking can be overwhelming, especially with all the technical terms thrown around. One of the most common terms you'll hear is "interest rate", which is the percentage of your account balance that's added to your account as interest.

A good rule of thumb is to understand the difference between a checking and savings account. A checking account is for everyday transactions, while a savings account is for long-term savings.

Compound interest is a powerful tool for growing your savings, but it only works if you let your money sit in the account long enough.

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There are three main types of banks: retail, commercial or corporate, and investment banks. Big global banks often operate separate arms for each category.

Retail banks offer basic banking services for customers, making them suitable for everyday banking. You can choose between a traditional bank with a physical building or an online bank for more convenience.

Commercial or corporate banks cater to businesses, but some also offer personal accounts. Consider keeping both business and personal accounts at the same bank or separate banks, depending on your needs.

Credit unions are nonprofit institutions available to people with a common employer, labor union, or professional interest. They're a great option if you want a bank that serves your specific community.

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When deciding which type of bank to use, consider whether you want to keep both business and personal accounts at the same bank or separate banks.

A retail bank offers basic banking services for customers, making it a good choice for everyday banking. You can choose between a traditional bank with a physical building or an online bank if you don't need to visit a bank branch.

A credit union is a nonprofit institution that serves people with a common employer, labor union, or professional interest, which can be a great option if you fit into one of these categories.

If you do decide to keep your business and personal accounts at separate banks, it's worth considering the pros and cons of each option carefully.

A checking account is a type of bank account that allows you to deposit and withdraw money as needed.

You can usually access your checking account online or through a mobile banking app, making it easy to manage your finances on the go.

To open a checking account, you'll typically need to provide identification and proof of address, and may need to make an initial deposit.

Many banks offer low or no fees for checking accounts, especially for students or low-income individuals.

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Credit unions are not-for-profit institutions created for and managed by their members or customers. They're a great option for those who want to bank with an organization that puts their needs first.

Unlike banks, credit unions have a limited range of services, so if you need a lot of bells and whistles, a credit union might not be the best choice. However, they often provide a more personalized experience.

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Credit unions are created, owned, and operated by their clients, who purchase shares in the co-op. This is how they fund their loans and keep their services affordable.

One of the biggest differences between banks and credit unions is their tax status. Credit unions are generally tax-exempt, which can be a big advantage for members.

Credit unions tend to have fewer locations and ATMs compared to banks. If you're someone who likes to bank on the go, this might be a consideration.

Banks are regulated at both the state and national level. The type of regulation a bank receives depends on its business structure.

State banks are regulated by each state's department of banking or department of financial institutions. These agencies oversee permitted practices, interest rates, and auditing and inspecting banks.

National banks are regulated by the Office of the Comptroller of the Currency (OCC), which focuses on bank capital levels, asset quality, and liquidity.

The Dodd-Frank Wall Street Reform and Consumer Protection Act, passed in 2010, introduced regular tests for large banks to measure their capital reserves under challenging economic conditions.

You should stash your cash in a bank until you need it to pay bills or withdraw money. This is the most basic function of a bank.

A bank can also be a place to get a loan to buy a car or a mortgage to buy a house. This is a common use for banks.

Before choosing a bank, make a comparison of the fees and charges that come with your accounts or loans. This will help you find the right fit for your financial needs.

Research and comparison will ensure you find a bank that safeguards your money, establishes credit, and makes payments.

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Banking Services are a crucial part of managing your finances, and understanding the different types of services available can help you make informed decisions about your money.

Online banking allows you to manage your accounts, pay bills, and transfer funds from the comfort of your own home, 24/7. This service is often available through the bank's website or mobile app.

Mobile banking apps enable you to check your account balances, deposit checks, and pay bills on the go, making it easy to stay on top of your finances no matter where you are.

ATMs and debit cards allow you to access your money at any time, and many banks also offer fee-free ATM access at thousands of locations worldwide.

Some banks also offer investment services, such as brokerage accounts and retirement plans, which can help you grow your wealth over time.

Credit cards, on the other hand, allow you to borrow money from the bank and pay it back over time, often with interest charges.

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Central banks play a crucial role in overseeing the nation's money supply and monetary policy. They are independent institutions authorized by governments to ensure the stability of the currency and the economic system.

Central banks regulate the capital and reserve requirements of banks, which means they set the minimum amount of money banks must hold in reserve. This helps maintain financial stability and prevent bank failures.

The US Federal Reserve Bank is the central bank of the US, while other notable central banks include the European Central Bank, the Bank of England, and the People's Bank of China.

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Central banks don't deal directly with the public, unlike commercial and investment banks. They're independent institutions authorized by a government to oversee the nation's money supply and monetary policy.

A central bank's main goal is to maintain the stability of the currency and the economic system as a whole. This involves regulating the capital and reserve requirements of the nation's banks.

The U.S. Federal Reserve Bank is the central bank of the U.S. It's a key player in the global banking system, along with its counterparts in other nations like the European Central Bank, the Bank of England, and the Bank of Japan.

Central banks have a lot of power to influence the economy through monetary policy, which can impact interest rates and the money supply. This can have far-reaching effects on businesses and individuals alike.

In contrast to commercial banks, which focus on serving business clients, central banks don't provide direct financial services to the public. Instead, they focus on maintaining economic stability and regulating the banking system.

A credit union is a not-for-profit institution created for and managed by its members or customers. They provide routine banking services to their clients, who are generally called members.

Credit unions are unique in that they are created, owned, and operated by their clients. Members purchase shares in the co-op, and that money is pooled together to fund the credit union's loans.

One of the key differences between credit unions and banks is that credit unions tend to provide a limited range of services. They also have fewer locations and automated teller machines (ATMs).

Credit unions are generally tax-exempt, which means they don't have to pay taxes on their profits. This can be a benefit to their members, as they can offer more competitive rates and services.

Overall, credit unions are a great option for people who want a more personalized banking experience. They are often more community-focused and may offer better rates and services to their members.

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CDARS is a service that provides a solution for large depositors looking for additional FDIC coverage for certificate of deposit account balances that exceed the FDIC coverage limit.

It allows large depositors to maintain multi-million-dollar FDIC-insured CD balances through a single financial institution.

With CDARS, you can break up large deposits into smaller ones and place them in various banks, ensuring that your entire balance is insured by the FDIC.

This means you can keep your money in one place, while still benefiting from the FDIC's insurance protection.