Financial Products and Services--The Basics

Before you head to a bank or credit union, learn the basics about the products and services they offer.

Checking Accounts

An account at a financial institution that allows for withdrawals and deposits. Great for paying bills and keeping track of spending.

Savings Accounts

A deposit account held at a bank or other financial institution that safeguards funds and provides a modest interest rate. Great for building emergency savings or saving for short or medium term goal.

Money Market Accounts

Low transaction checking accounts that offer a higher interest rate in exchange for a higher minimum balance requirement.  Can be good for building emergency savings or paying for occasional expenses.

Certificates of Deposit

Savings accounts that offer a higher interest rate in exchange for committing your money for a set period of time (six months, 12 months, etc.).

Mortgages

Loans to purchase a home where the collateral is the home itself.

Home Equity Loans

Loans offered to homeowners where the loan amount is capped at a percentage of the equity that the owner has on the home.

Auto Loans

Loans used to finance the purchase of an automobile.  It is usually unsecured and based on the borrower's integrity and ability to pay. The collateral is the vehicle.

Personal Loans

Unsecured loans offered to bank customers.

Credit Cards

Unsecured, revolving loans that comes with a card and is primarily used for purchases, though some also provide cash advances. The credit card issuer sets a maximum limit that can be charged.  Borrowers make monthly payments on the amount charged to the account, as well as on the interest that is charged by the issuer. When payments are made, those funds become available for borrowing again. 

Debit Cards

Cards issued in association with checking or savings accounts that allow point-of-sale purchases that are then deducted from bank balances and ATM withdrawals.

ATM Cards

Cards issued in association with checking or savings accounts that allow cash deposits and withdrawals at Automatic Teller Machines (ATM) but not point-of sale purchases.

Cashier’s Checks

Checks written by banks that verify that the bank customer has sufficient funds to cover the check.  These checks are guaranteed by the bank or credit union. A cashier’s check may be required for closing costs in a home purchase, for example.

Money Orders

Documents written against other accounts or bought with cash, which provide a receipt and are converted to cash by the recipient.  Often used to pay bills when someone does not have a checking account.

Traveler's Checks

Checks written against an account or bought with cash that are made valid when completed with the payee's name and signed by the owner.  Less commonly used now.

Wire Transfers

A way to move money from one person to another.  Often used to send money internationally.

Foreign Currency Exchange

Converting one country's currency to another's.

Safe Deposit Boxes

A box located at a bank for use for personal possessions that can only be accessed with the assistance of bank personnel by lock and key.