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We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free – so that you can make financial decisions with confidence.
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At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity , this post may contain references to products from our partners. Here’s an explanation for how we make money .
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next.
Bankrate follows a strict editorial policy, so you can trust that we’re putting your interests first. All of our content is authored by highly qualified professionals and edited by subject matter experts, who ensure everything we publish is objective, accurate and trustworthy.
Our banking reporters and editors focus on the points consumers care about most — the best banks, latest rates, different types of accounts, money-saving tips and more — so you can feel confident as you’re managing your money.
Bankrate follows a strict editorial policy, so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. Here is a list of our banking partners.
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Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information.
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey.
Bankrate follows a strict editorial policy, so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers.
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Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service.
Banks serve a variety of functions besides offering checking and savings accounts and granting loans. Their customers include everyone from individual consumers and small businesses to governments and global corporations.
For this reason, there are different types of banks and different types of bank accounts. Understanding this will help you know how to choose a bank.
Here is a look at various types of banks and their functions, so that you can know what to look for in a bank and decide which one is right for you.
Retail banks offer checking and savings accounts, as well as mortgages and other loans to the public. Often referred to as “traditional” or “consumer” banks, retail banks also offer investment products like certificates of deposit (CDs) and individual retirement accounts (IRAs).
Some retail banks offer credit cards and wealth management services for customers with a high net worth. A retail bank can be a small, local bank or it can be a division of a banking giant like JPMorgan Chase.
Retail banks are often insured by the Federal Deposit Insurance Corp. (FDIC). FDIC insurance protects customer deposits if a bank fails.
Brick-and-mortar banks are those that operate branches. Bank of America, Chase and Wells Fargo are examples of large, traditional banks with thousands of branches scattered around the country.
Many brick-and-mortar banks also have developed sophisticated websites and digital tools, giving customers the option of banking online or branch banking.
Online banks are digital financial institutions without brick-and-mortar branches. They are sometimes called “internet banks” because all transactions, such as paying bills, are conducted online from the bank’s website or using its mobile app.
Customers of online banks must have a computer or smartphone and a secure internet connection. Online banks issue debit cards for making purchases and cash withdrawals, and they often use ATM networks such as Allpoint or MoneyPass.
Discover Bank and Ally Bank are two of the most well-known and reputable online banks. Check out Bankrate’s picks for the best online banks.
Neobanks are financial technology companies, or “fintechs,” which offer digital banking services through a mobile app or website. Sometimes called “challenger banks,” neobanks do not have branches. They typically offer checking and savings accounts and often have digital tools to help customers budget and save money.
Neobanks tend to charge very low fees or none at all. Not all neobanks are chartered, meaning they do not operate under the supervision of a state or federal government. However, some neobanks partner with chartered, federally insured banks.
Chime and Varo Bank are examples of popular neobanks. Chime partners with two nationally chartered, FDIC-insured banks, and Varo Bank is nationally chartered and a member of the FDIC.
Commercial banks serve businesses and governments. They provide accounts that allow complex entities to manage their money and conduct their operations, and they offer loans for commercial real estate, equipment and other necessities.
Many large commercial banks, such as JPMorgan and Bank of America, also have consumer divisions that offer personal banking products.
Investment banks’ clients are typically large corporations and governments. Investment banks manage investments for large pension funds, handle stock and bond issues to help their clients raise money, and handle initial public offerings (IPOs) and mergers and acquisitions, among other things.
Some investment banks, such as Goldman Sachs, also have consumer banking divisions.
The Federal Reserve System is the “central bank” of the United States. The central bank has a responsibility to promote the smooth operation of the nation’s economy, in the interest of the general public.
The Fed has five main functions:
The Fed has tremendous sway over the economy. For example, when it raises or lowers interest rates, banks act accordingly. This impacts the cost of mortgages, credit cards and other loans, as well as yields on consumer deposit accounts, such as savings accounts and certificates of deposit.
Unlike banks, credit unions are not-for-profit institutions that are owned by their members. Like banks, they take deposits, make loans and provide a range of other financial services.
Credit union profits are returned to their members by way of lower fees, higher yields on savings accounts and cheaper loans.
You must be a member of a credit union to use its products, and each credit union has its own membership criteria, often based on a shared interest such as working for the same company or being in a particular occupation. Members’ families typically are eligible to join. Sometimes, membership is as easy as making a $5 deposit to open a savings account.
A CDFI provides financial products and services and investment capital to individuals and businesses in low-income communities. Banks, credit unions, venture capital funds and other public and private financial entities that invest in revitalizing neighborhoods can be CDFIs.
CDFIs collaborate as a nationwide network to help people buy homes, start businesses and invest in schools, health centers and other projects in underserved communities. There are at least 1,000 CDFIs operating in the country.
Organizations must be certified as a CDFI. The fund is part of the U.S. Department of the Treasury.
Savings and loan associations focus on real estate loans, especially for single-family homes and other residential properties. Originally known as “thrifts” because they offered only savings products, savings and loans have expanded over the decades into other consumer and business products, such as checking accounts and mortgages.
Thrifts can be owned by their shareholders and depositors, or just shareholders. The S&L crisis of the late 1980s and early 1990s shuttered many of these institutions or forced them to merge with other banks.
Your needs and financial goals should guide you in choosing a bank. If you’re a consumer who wants just a basic checking account and direct deposit, your search criteria will be different from someone who needs the right accounts and services for running a business.
You can refine your search by considering the pros and cons of banks vs. credit unions. Some other factors to consider when shopping for a bank include:
Finding a bank that’s the right fit for you doesn’t have to be difficult. The first step is to know what you need. Don’t be afraid of online banks. They are often federally insured just like traditional brick-and-mortar banks.
Don’t assume that a traditional bank will be behind the times with digital banking, because many big banks have very sophisticated, secure and user-friendly online and mobile banking tools. And don’t assume that a giant commercial or investment bank can’t help you because many of them have consumer banking divisions with all the products and services of retail banks.
In the vast financial landscape, there is a bank out there that’s right for you.
Bankrate.com is an independent, advertising-supported publisher and comparison service. Bankrate is compensated in exchange for featured placement of sponsored products and services, or your clicking on links posted on this website. This compensation may impact how, where and in what order products appear. Bankrate.com does not include all companies or all available products.
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