2.2.1.F1
Introduc on to Depository Ins tu ons
Advanced Level
Millions of people use financial services offered by
depository
ins tu ons
on a daily basis to help them manage their
money. Commercial banks, credit unions, and savings banks are all examples of depository ins tu ons. Many types of
companies offer financial services to consumers. But, depository ins tu ons are special in that they accept deposits from
consumers and the safety of those deposits is o en guaranteed by the government. The range of valuable services ed to
deposit accounts (online banking, checking accounts and debit cards, bill payment services, automa c savings transfers)
makes depository ins tu ons an important component to a financial plan.
Types
of
Depository
Ins tu ons
Commercial banks and credit unions are the most commonly used depository ins tu ons. Although both types of
ins tu ons offer a range of “banking” services, they are actually quite different in terms of their ownership structure
and the types of consumers they serve.
Commercial
banks
are for
‐
profit depository businesses that offer financial services to both consumers and other
businesses. Banks are usually the largest depository ins tu ons and offer the widest variety of services to customers.
Credit
unions
are depository ins tu ons that offer many banking services. But, unlike banks, they are owned by their
customers, who are usually called members. A credit union has membership qualifica ons that require its members share
a common bond such as the same employer, the geographic area in which they live or membership in an organiza on.
Credit unions are non
pro
‐
fit organiza ons exempt from federal income tax. This feature o en allows them to pay higher
interest rates on deposits, charge lower interest rates on loans and charge lower fees, compared to banks and other
depository ins tu ons.
Do you use a depository ins tu on? If so, what kind of depository ins tu on is it? If not, what features of a depository
ins tu on do you think would work best for you?
No
The physical loca on of a depository ins tu on may influence your choice. Here are some ques ons to consider when
choosing a depository ins tu on that best fits
your
financial needs:
Is the depository ins tu on accessible; does it have mul ple loca ons close to home, work and school?
Does the depository ins tu on have loca ons (branches) throughout the United States (something to consider
if you travel a lot or plan to move)?
What type of transporta on is required to access a branch if it isn’t within walking distance?
If you are considering a depository ins tu on whose services are offered only online, will that type of access
meet your financial needs?
© Take Charge Today – August 2013 – Introduc on to Depository Ins tu ons – Page 1
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Ins tute at The University of Arizona
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2.2.1.F1
Deposit
Insurance
- Fall '19
