Banks, Credit Unions, Savings & Loans

Vocabulary Transactional Account - A deposit account at a financial institution which allows its users to access the account quickly, safely and frequently through a variety of methods. Savings Account - An account which cannot be used as frequently and on- demand as transactional accounts. Typically, these accounts earn interest as a result.

Vocabulary Money-Market Account - Savings account which draws interest based on current money market interest rates Certificate of Deposit - Money deposit at a banking institution which is loaned to the institution for a certain time with a certain rate. At the end of the term, the CoD can be withdrawn and the money plus interest will be paid.

Vocabulary Secured Loan - a loan in which the borrower pledges an asset as collateral for the loan Collateral - An asset which is promised to a lending institution should the borrower default on a debt. If a borrower defaults, the asset will become a possession of the lender to be sold to recoup costs.

Vocabulary Unsecured Loan - Not secured again the borrowers assets. Overdrafts Credit Card Debt Personal Loans

Commercial Banks Financial Institution that lends money and provides transactional, savings, and money market accounts, and also accepts Certificates of Deposits

Commercial Banks Engage in: Issuing checks Safety deposit boxes Lending money Cash Management

Credit Unions Provide transactional, savings, and money market accounts Issue checks and credit cards Offer loans

Credit Unions Only members can deposit or borrow money from a CU Not-for-profit Not to be confused with Non-profit Owned by members Members own accounts Typically, one-vote-one-man

Savings & Loan Specialize in savings accounts Specialize in loans Mostly mortgages

Savings & Loans Also mutually owned Borrowers and Depositors are members with full voting rights

Comparing/Contrasti ng

Banks vs. Others Banks - just like any other business. Controlled by a hierarchy and owned by stockholders. Credit Unions - Owned and controlled by account holders Savings & Loan - Owned and controlled by account holders

Banks vs. Others Banks are for-profit They make money off of interest on loans Fees CU and S&Ls are owned and operated by and for the people who use them Many times are community oriented Profit is good, but not the primary goal

CU vs. S&L Credit Unions for the most part, do the same as banks. Savings and Loans typically do not handle transactional accounts, checking, or credit cards.

CU vs. S&L Credit Unions typically have requirements to starts accounts Work for a certain company Having direct relatives already with the credit union Savings and Loans are based upon whether or not an individual has good credit and the ability to repay loans

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