ObjectivesDescribe the differences and similarities
between banks and credit unionsAnalyze financial institutions in order to
choose the best fit for your situation
Types of Financial InstitutionsSection 1
Financial Services and Institutions
Deposit Institutions
Commercial Banks
Savings and Loan Associations (S&L)
Mutual Savings Banks
Credit Unions
commercial banka for-profit institution that offers a full range of financial services, including checking, savings, and lending
savings and loan association (S&L)a financial institutional that traditionally specialized in savings accounts and mortgage loans, but now offers many of the same services as commercial banks credit uniona nonprofit financial institution that is owned by its members and organized for their benefit
Banks & Credit UnionsBanks Credit UnionsFor-profit companies
owned by shareholdersNot-for-profit institutions
owned and controlled by their own customers, who are known as members
Managed by a member and volunteer board of directors, who are elected by other members
Managed by a paid board of directors elected by the bank’s shareholders
Banks & Credit UnionsBanks Credit UnionsOwned by shareholders;
customers do not have ownership or voting privileges unless they also own stock in the bank
Profits benefit a small group of stockholders
Owned by each credit union member, who has equal ownership and one vote, regardless of how much money a member has on deposit
Profits are returned to members in the form of lower fees and loan rates and higher interest on deposits
Banks & Credit UnionsBanks Credit UnionsAccounts are federally
insured up to $250,000 by the Federal Deposit Insurance Corporation (FDIC)
Accounts are federally insured up to $250,000 by the National Credit Union Administration (NCUA)
Who do they serve?Banks Credit UnionsOffer their services to
everyone; anyone can become a customer
To become a member of a credit union, you must meet certain common bond requirementsLive in a certain areaAttend a certain schoolWork at a specific placeAffiliated with a certain
organization (church, community)
Comparing Financial InstitutionsSection 1
Financial Services and Institutions
Where can you get the highest rate of interest on your savings?
Where can you obtain a checking account with low (or no) fees?
Will you be able to borrow money from the institution—with a credit card or another type of loan—when you need it?
Do you need an institution that offers free financial advice?
Is the institution FDIC- or SAIF-insured?
Does the institution have convenient locations?
Does it have online banking services?
Does it have any special banking services that you might need?
Which is Better?Depends on your situationDepends on your employerDepends on your beliefsDepends on what your family has done
traditionally