• Ryan P. Cleary

Float Finance 2.1: Financial Products, Services, and Providers


In this article, we will discuss how your needs should determine which financial products and services you should select. You should consider your needs and shop around for different financial products and services.


Float Finance is a series of accessible articles, tools, and resources designed to empower early career employees and students to navigate their financial journey.


Financial Institutions: Banks and Credit Unions

Banks and credit unions are financial institutions and offer a wide range of products and services to help you manage your money (The term “bank” also includes savings associations). They accept deposits and loan money including checking accounts and savings accounts. They may also offer credit cards, car loans, personal loans, mortgages, and other products and services.

Deposit Accounts

Savings accounts, checking accounts, and certificates of deposit are examples of deposit accounts.

These accounts may pay interest. Interest is what the financial institution pays you for keeping your money there. Savings accounts pay interest. Checking accounts may or may not interest. If the account pays interest, the more money you deposit and the longer you keep it there, the more interest you will likely earn.


Loans

People can also borrow money from financial institutions. This means the financial institution lends money. Offering credit cards, auto loans, student loans, and mortgages are examples of lending money. You usually pay interest when you borrow money. You may also pay other fees. How much interest you pay depends on the interest rate, how much money you borrow, and how long you borrow it. The interest rates financial institutions charge for loans are generally higher than the interest rates they pay on money in deposit accounts. This is one way they make money.

Differences Between Banks and Credit Unions

Banks and credit unions are similar, but they have some key differences.

Banks have customers. Credit unions have members (sometimes called “shareholders”) who must meet a credit union’s criteria for membership to open an account. This may be based on where you work, live, or worship; on military service; or on the associations you or your family belong to. Banks generally do not have these limitations on who can open accounts.

  • Credit unions are not-for-profit organizations owned by their members. This means many credit unions can offer better interest rates and returns to their members than banks. Most banks are owned by shareholders, which means they are for-profit businesses. Other banks are owned by the people who deposit their money there – these may be called mutual non-stock institutions or “mutuals.”

  • The products and services that financial institutions offer can differ. Most will offer at least one basic checking account and savings account product. But other products and services may vary, such as the option to access your account on a mobile device or the availability of automated teller machines (ATMs) you can use for free.

  • Banks and credit unions are both regulated and insured to keep your money safe. We’ll discuss deposit insurance more in later articles.


We use the term “financial institution” in to include both banks and credit unions.



Deposit Insurance

The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the United States government whch protects the funds depositors (customers) place in FDIC-insured banks. Since the FDIC was established in 1933, no depositor has lost a penny of FDIC-insured funds. FDIC deposit insurance protects you if the bank fails, meaning that it is closed down by the government. The FDIC insures deposit accounts at banks, including savings accounts, checking accounts, and certificates of deposit. It also insures cashier's checks, money orders, and other official items issued by an FDIC-insured bank.


It is important to know that FDIC insurance does not cover other financial products and services that banks may offer, such as stocks, bonds, or mutual funds.


You may notice that banks mention that they are a member of the FDIC when you visit a branch or their official website. This is because FDIC insurance is a big deal! The FDIC provides insurance of at least $250,000 per depositor, per FDIC-insured bank, per ownership category—single account, joint account, certain retirement accounts, for example. It is important to note that if you have more than this amount in a single category at an institution, the additional amount may not be covered.

To verify that an institution is FDIC-insured, click on “Bank Find” at www.fdic.gov or contact the FDIC’s toll-free Call Center at 1-877-275-3342. If you would like to learn more about deposit insurance, including what accounts are and are not FDIC-insured, visit www.fdic.gov/deposit

The National Credit Union Administration (NCUA) insures deposits at credit unions. They call it “share insurance” To verify that a credit union is NCUA-insured, go to http://mapping.ncua.gov/ or contact the NCUA toll-free at 1-800-755-1030. You can learn more at www.mycreditunion.gov.


Accessing Services

Now that you have an understanding of the differences between banks and credit unions and how they are insured, you may be asking “how do I access their services?”

Financial institutions may offer access through:


  • Branches (you can go to any branch associated with your bank)

  • Automated teller machines (ATMs)

  • Phone numbers

  • Email

  • Your online account portal

  • Mobile apps (we’ll talk more about mobile banking later)


If you need a reasonable accommodation to access your financial institution’s services, you just need to let them know. Some institutions offer the following:


  • Use relay calls including video relay

  • Arrange to have a sign language interpreter onsite

  • Offer materials in audio and Braille formats

  • Provide ATMs that have accessibility features, such as voice instructions or Braille on the ATM keypad

  • Provide captioned videos on websites and other features to enhance accessibility


There are a whole host of different services which you ought to consider as you go through the process of deciding on a financial institution. In future articles we will explain what type of services are offered and what you ought to consider as you make the decision!



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