Banking basics: What you need to know to get started

A bank is a financial institution chartered to safely hold your money and to make loans. Beyond those 2 primary functions, banks offer a wide range of financial products, including:

• Checking and savings accounts
• Credit cards
• Mortgages
• Consumer loans
• Investment products
• Commercial loans

When choosing a bank, it’s important to understand the benefits of each and how they might fit your lifestyle. There are 3 types of banks you’ll likely encounter:

• National banks: These are banks that have locations nationwide. They offer a wide range of services and tend to have more standardized lending practices.
• State banks, also sometimes referred to as community or regional banks: These are typically smaller banks with limited locations. They might not offer the same range of services as a national bank and typically focus on local residents or businesses.
• Online banks: While most national and state banks offer digital services like online banking and mobile apps, online banks operate entirely through the internet and have no physical locations. They may offer lower-cost services, but this convenience often comes with limited personal interaction.

Another option you might choose for banking is a credit union. While credit unions offer many of the same services as banks, they are not banks. They are cooperatives owned by their members that focus on serving their members. Credit unions tend to have fewer branch offices and might not provide the same services as a bank but might offer better interest rates or lower fees.