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I. Different Types of Banks Seen one bank, seen them all, right? Definitely not! All banks are not created equal. This chapter continues with the theme of earning an income . Banks are important because they provide us with a safe place to deposit and store our hard-earned money. Banks have been around for thousands of years and are essential to our lives and livelihood. There are several different kinds of banks: commercial banks with both retail and business divisions, credit unions, and savings and loans. Let's explore banks and some of the products they offer for depositing your hard-earned cash.
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OldMoney Bank Founded in 1472, Banca Monte dei Paschi di Siena, an Italian bank, is the oldest continually operating bank in the world.
Commercial Banks A commercial bank offers banking services to the general public . It is a standard bank, the kind of bank you are probably familiar with because there may be several in your town. Commercial banks usually have two divisions: a retail division and a business division: Retail Banking Division. The retail division of a commercial bank provides consumer related services and financial products , such as checking and savings accounts, Certificates of Deposit (“CDs”), home loans, car loans, credit cards, safe deposit boxes, and foreign currency exchange. It is also known as the consumer bank division . A retail bank has branches with Automated Teller Machines (ATM), deposit windows, employees and tellers. Retail banks are important providers of consumer credit . Consumer credit includes loans and credit cards used by consumers to purchase goods or services for personal, family, or household purposes. Consumer credit is an important driver of the economy. Advise students they will learn more about consumer credit in a later lesson. Business Banking Division. The business division of a commercial bank handles the banking needs of businesses , such as savings and checking accounts, and merchant accounts, which enable businesses to accept credit cards for payment of goods and services. The business division makes loans for business equipment, processes payrolls, sells business insurance, and meets other business-specific needs. If you were to start a business, you would talk to a bank’s business division to set up accounts and get a business credit card or loan. Some well-known and large commercial banks are Bank of America, U.S. Bankcorp, and Chase Bank. There are also thousands of smaller, community, regional, and statewide banks all over the U.S. Credit Union A credit union is a banking institution that is owned by its customers . By depositing money into the credit union, the depositor becomes a member and is, in effect, a part owner of the institution. Credit union members usually have a common bond , such as a type of profession, or employment with a particular company or organization. For example, there are several credit unions made up of teachers. There are also credit unions for members of the military. Credit unions are non-profit institutions . That means the money a credit union PRODUCT PREVIEW
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THE 21st CENTURY STUDENT’S GUIDE TO FINANCIAL LITERACY
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