A Guide to Commercial Banks Savings and Loan Associations and Credit Unions

Commercial banks, savings and loan associations, and credit unions are all types of financial institutions that provide banking services to consumers. They differ in their ownership structure and business model.

Commercial banks are for-profit institutions that offer a wide range of financial products and services. They provide personal and business banking services, including checking and savings accounts, loans, and credit cards.

Savings and loan associations, on the other hand, are member-owned cooperatives that focus on providing mortgage and other consumer loans. They were originally designed to serve low-income communities and provide affordable housing options.

Credit unions, like savings and loan associations, are member-owned cooperatives that offer financial services to their members. They are often more community-focused and offer more personalized service than commercial banks.

Savings and loan associations are owned by their customers or community, providing individual consumers with checking accounts, personal loans, and home mortgages.

Financial institutions like savings and loans are required by law to produce a certain number of loans secured by residential real estate, but their main goal is often to lend for residential mortgages.

Savings and loans aim to serve the local community, offering financial services that benefit their customers and the neighborhood.

Commercial banks are a type of financial institution that offers a wide range of services to individuals and businesses. They have been around for a long time, but recent trends suggest they're adapting to changing consumer needs.

A notable trend in the banking industry is the rapid closure of branches. Since 2009, more than 20,000 branches have closed, with a little over 4% of branches closing between June 2022 and June 2023.

However, not all news is bad. The decline of overdraft fees is a welcome change for consumers. Alliant Credit Union, Ally Bank, and Capital One are among the financial institutions that have led this trend.

The average overdraft fee decreased by 11% from 2022 to 2023, reaching $26.61. This is a significant reduction, and it's likely to benefit many customers.

Despite the decline of branches, more households are gaining access to bank or credit union accounts. In 2021, the number of "unbanked" households was 4.5%, the lowest since the FDIC began tracking this metric in 2009.

Some commercial banks are also prioritizing their environmental impact, such as reducing paper waste by switching to paperless statements. This is a positive step towards a more sustainable future.

Here are some notable commercial banks that offer a range of accounts, including savings and checking options:

Savings and loan associations are owned by their customers or community, making them a unique type of financial institution.

They provide essential services such as checking accounts, personal loans, and home mortgages, which are crucial for individual consumers.

Savings and loan associations are required by law to produce a certain number of loans secured by residential real estate, but their main goal is to lend for residential mortgages.

This focus on residential mortgages is a key aspect of their business, and it's a service that many consumers rely on for their financial needs.

A savings and loan is actually a type of thrift, which gives you an idea of their origins and purpose.

Credit unions are a type of financial institution that are not-for-profit and often have a strong emphasis on community. They are usually smaller than banks and have fewer branches, but may share branches through a network.

One of the key benefits of credit unions is that they usually offer higher interest rates on deposit accounts. According to the article, this is a significant difference between credit unions and banks, with credit unions often offering better rates.

Credit unions are also insured by the National Credit Union Administration (NCUA), which provides similar protection to the FDIC insurance offered by banks. This means that your deposits are protected up to $250,000 per share owner, per insured credit union, per account ownership category.

Some credit unions are part of a network, which can provide more access to branches and services. The article mentions that credit unions may share branches through a network, making it easier for members to access their accounts.

Here are some key differences between credit unions and banks:

Overall, credit unions can be a great option for those who want to support a community-focused financial institution and potentially earn higher interest rates on their deposits.

Commercial banks, savings and loan associations, and credit unions all operate in a similar way, but with some key differences.

They all accept deposits from customers, which they use to make loans to other customers or to invest in other financial instruments.

The primary source of funding for commercial banks is deposits from individuals and businesses.

Their profits come from the difference between the interest they earn on loans and the interest they pay on deposits.

To ensure stability, they are required to hold a certain percentage of deposits in reserve, rather than lending them out.

Savings and loan associations, on the other hand, primarily focus on accepting deposits and making mortgage loans.

They are also required to hold a certain percentage of deposits in reserve, which can limit their ability to make loans.

Credit unions, being member-owned and not-for-profit, can offer more competitive interest rates and lower fees.

Their profits are distributed back to their members in the form of dividends or lower loan rates.

Banks make money by charging a variety of fees. This can include things like overdraft fees, ATM fees, and late payment fees.

Banks also earn interest from loans such as mortgages and auto loans. They charge borrowers a higher interest rate than what they pay depositors.

The bank's profit comes from the difference between what they earn on fees and interest and what they pay depositors. This is how banks manage to stay in business.

Brick-and-mortar banks may operate thousands of branches, just one, or some number in between. Online-only banks, on the other hand, usually don’t operate any branches.

Online banks are able to attract customers by offering higher yields on savings accounts, money market accounts, and CDs, though not all online banks offer competitive rates. They also don't charge maintenance fees.

Brick-and-mortar banks sometimes offer services like signature guarantee and safe deposit boxes, which some consumers prefer. Online banks don't offer these services, but instead focus on online products and services.

Banks are for-profit institutions, whereas credit unions are not-for-profit.

Banks usually offer lower interest rates on deposit accounts, especially at national banks, whereas credit unions often provide higher interest rates.

The Federal Deposit Insurance Corp. (FDIC) insures up to $250,000 per depositor, per insured bank, per account ownership category.

Credit unions, on the other hand, are insured by the National Credit Union Administration (NCUA) for up to $250,000 per share owner, per insured credit union, per account ownership category.

Banks typically prioritize growth over community involvement, whereas credit unions emphasize community.

National banks have a large number of branches, while regional banks have fewer, and credit unions often have fewer branches than banks but may share branches through a network.

Banks are often quicker to roll out new apps and technology, whereas credit unions tend to lag behind in adopting new technology.

Credit unions often offer slightly higher interest rates on deposits compared to brick-and-mortar banks. This can be a significant advantage for those who prioritize earning interest on their savings.

However, credit unions tend to offer lower interest rates on loans, which may not be ideal for those who need to borrow money.

Here's a comparison of the interest rates offered by credit unions and banks:

Overall, the choice between a credit union and a bank depends on your individual financial needs and priorities.

Financial Institution Safety is a top concern for many people. Banks and credit unions are generally safe places to keep your money, thanks to the Federal Deposit Insurance Corp. (FDIC) and the National Credit Union Administration (NCUA) insurance.

This insurance covers your principal and any interest you're owed through the date of your bank's default, up to $250,000 in combined total balances. That's a significant amount of protection.

Barring an economic catastrophe, you can feel relatively secure knowing your money is insured.

Commercial banks have several advantages that make them a popular choice for consumers. They often have more branches in the region or across the country, making it easier to access your money.

Having more branches also means you can visit a bank in person, which can be helpful for those who prefer face-to-face interactions.

Typically, commercial banks are quicker to roll out new apps and other technology, making it easier to manage your finances on the go.

This can be a significant advantage for people who are always on the move and need to check their accounts or make transactions quickly.

Commercial banks like BMO Alto Online Savings Account, U.S. Bank Smartly Savings, and Discover Cashback Debit offer a range of benefits to their customers.

Here are some of the key advantages of commercial banks:

Commercial banks can be a bit of a letdown when it comes to saving your money. Many large traditional banks in the U.S. don't offer competitive annual percentage yields (APYs) on their savings products.

High balance requirements or maintenance fees are also common, though there are usually ways to waive them. I've seen friends get stuck with these fees if they don't meet the requirements.

Here are some key disadvantages of commercial banks:

Credit unions offer several advantages over traditional banks. One of the main benefits is that they typically offer slightly higher interest rates on deposits than brick-and-mortar banks.

Credit unions also tend to have a strong emphasis on community, which can be a major draw for those who value local involvement. This emphasis on community is a key differentiator between credit unions and banks.

Here are some key differences between banks and credit unions:

Overall, credit unions provide a unique set of benefits that can be attractive to those looking for a more community-focused banking experience.

Credit unions can be a great option for banking, but they're not perfect. One of the main disadvantages is that they often have limited access, meaning you might not have a branch near you.

If you're looking for higher rates, you might find them at online-only banks, which tend to have more competitive savings and CD yields.

To join a credit union, you often need to meet certain requirements, such as living or working in a specific region, or being part of a certain field or occupation.

Here are some specific requirements you might need to meet to join a credit union: