Business and Personal Finance © 2007
- The three primary types of financial services are savings; payment services; and borrowing.
- Commercial banks, savings and loan associations, mutual savings banks, and credit unions are financial institutions that accept secure deposits and provide transfer and lending services. Life insurance companies and investment companies accept customers' funds, provide financial security for dependents, and invest and manage funds. Finance companies and mortgage companies offer loans.
- Bank savings plans offer the lowest interest rates with the greatest liquidity. Higher interest rates are available on certificates of deposit (CDs); money must be on deposit for a specified time. Money market accounts and U.S. Savings Bonds are less liquid than bank savings accounts, but may provide greater returns.
- To evaluate a savings plan, look at its features, such as its rate of return compared with inflation, tax considerations, liquidity, and restrictions and fees.
- Regular, activity, and interest-earning are the three categories of checking accounts. Some of these require minimum balances and/or fees for transactions. Some pay interest on deposits.
- To use a checking account, write checks carefully, endorse checks you deposit, and reconcile your checkbook against bank statements.