Basic banking services

Banks offer different ways to hide cash and different ways to borrow money.

Checking Accounts
Current accounts are deposits used by consumers and businesses to pay bills and withdraw cash. They pay little or no interest and usually include a monthly fee, usage fee, or both.

Today’s consumers typically receive their paychecks and any other regular payments automatically into one of these accounts.

Savings accounts.
Savings accounts pay interest to the depositor. Depending on how long account holders hope to keep their money in the bank, they can open a regular savings account that pays low interest, or a certificate of deposit (CD) that pays slightly higher interest. CDs can earn interest for just a few months or up to five years or more.

It is important to note that money in current accounts, savings accounts and CDs are insured by the federal government for up to $250,000 through the Federal Deposit Insurance Corporation (FDIC).

Credit Services.
Banks make loans to consumers and businesses. Money deposited by their customers is lent to other customers at a higher interest rate than is paid to the depositor.

At the highest level, this is the process that keeps the economy running. People put their money in banks; the bank lends money in the form of car loans, credit cards, mortgages, and business loans. Loan recipients spend the money they borrow, the bank earns interest on the loans, and this process keeps money moving through the system.

Like any other business, a bank’s goal is to make a profit for its owners. For most banks, the owners are their shareholders . Banks do this by charging more interest on the loans and other debts they issue to borrowers than they pay to the people who use their savings instruments.

For example, a bank might pay 1% interest on savings accounts and charge 6% interest on its mortgage loans, making a gross profit of 5% for its owners.

Banks make a profit by charging more interest on loans than they pay on savings accounts.
Conventional and online banks
Banks range in size from small community institutions to global commercial banks.

According to the FDIC, as of 2021, there were just over 4,200 FDIC-insured commercial banks in the United States.
This number includes national banks, state banks, commercial banks, and other financial institutions.

Traditional banks now offer both conventional branches and online services. Online banks began appearing in the early 2010s.

Consumers choose a bank based on its interest rates, fees charged, convenient location, and other factors.