Showing posts with label Community Banks. Show all posts
Showing posts with label Community Banks. Show all posts

Tuesday, October 11, 2022

Learning Adulting? Here Are 4 Types of Banks and How They Work

Your finances are an important part of your everyday life. In order to maintain a good lifelong financial strategy, you should be aware of the four most common banking options and how they work.

Understanding the difference between each will help you make some important financial decisions.

Community Banks

These are financial institutions that are owned and operated locally. They aren't affiliated with larger banks, so their funding sources come from the local community. 

Although they operate on a smaller scale, community banks offer a full range of services, including checking and savings accounts, certificates of deposit, mortgage loans, and more.

One of the biggest advantages of banking with a community bank is that all financial decisions are made by people who live in your community. They don't need to consult with a larger financial institution about approving loan applications.

A disadvantage of community banks is that they often don't utilize the same technology as larger banks, which can limit your ability to manage your finances online. There's also the risk that a larger bank could purchase your community bank and rebrand it to be part of a larger financial institution.

International Banks

These banks are based out of a foreign location and typically service clients that live in one country but wish to utilize banking services in another. 

International banks typically offer checking and other special deposit accounts. Most of these earn interest as long as they maintain a certain minimum balance.

There are a few benefits of banking with an international bank, including the ability to protect your assets. Assets held at other banks can be seized by the authorities if necessary to satisfy legal fees, but funds in international banks are untouchable. 

Banking with international banks also allows you to take advantage of more competitive interest rates, which is great for those preparing for retirement years.

If you're thinking of banking with an international bank, it's important to understand the laws and regulations specific to the country the bank is located in.

Credit Unions

Credit unions usually offer the same services as other banks, but the biggest difference is that they are owned by account holders. Because of this, they are considered non-profits and offer tax exemption benefits. 

Credit unions can be located locally or nationally, and it isn't out of the ordinary for them to be established to benefit people working in specific industries or residing in a certain region.

Members of credit unions enjoy the benefit of not incurring fees, but they offer fewer financial services and are limited in what they can allow customers to borrow compared to other banks.

Online Banks

These financial institutions do not have any physical locations, which means all financial transactions are done virtually.

One of the biggest benefits of online banks is that there are no limitations when it comes to your ability to conduct business. You can easily manage your finances without leaving home. 

In addition, since they do not have to maintain in-person banking locations, they often charge lower fees and provide a better return on any investments you may have. They also use all of the latest technology and security features, which can give you peace of mind.

While there are many benefits to online banking, one drawback is that some online banks don't offer a basic checking account option. In addition, depositing a check electronically can sometimes prove to be a challenge and your options to speak to a real person are limited.

Each of these banking options offers great benefits, but it's important to do your research to ensure you're choosing a financial institution that meets your specific needs.

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