Types of Financial Institutions

By Chad Barbour

Commercial Banks

  • For-Profit depository business
  • Offers financial services to both consumers and other businesses.
  • Usually are the largest depository institutions and offer the widest variety of services to customers.
  • The standard insurance amount is $250,000 per depositor, per insured institution, for each account ownership category.
  • Insurance protection by the Federal Deposit Insurance Corporation.
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Credit Unions

  • Non-Profit depository business exempt from federal income tax.
  • Owned by their customers, called members.
  • Has membership qualifications that require its members share a common bond such as the same employer, the geographic area in which they live or membership in an organization.
  • Pays higher interest rates on deposits, charge lower interest rates on loans, and charge lower fees.
  • Insurance protection by the National Credit Union Association.
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