You might think of “the bank” as the place you keep your savings and checking accounts, but these financial institutions offer a lot more. As competition increases and technology advances, banks (including credit unions and savings institutions) are offering more and more services intended to attract – and retain – customers. Whether you’re opening your first savings account or you’ve been banking for years, it’s helpful to know which services your bank offers, so you can take full advantage. To get you started, here’s a list of the other services most banks provide.
Odds are you have a checking account to pay for bills and everyday spending, plus a savings account to build an emergency fund. Most banks also offer money market accounts, which tend to offer better interest rates than savings accounts, as well as certificates of deposit (CDs), college savings plans, individual retirement accounts (IRAs) and investment accounts.
These accounts are designed to help you save for longer-term financial goals – think college for the kids and retirement for you – and help you grow your wealth by investing your money. That savings account you have may only pay 0.01% interest, for example, but move that money into a CD and it could be earning 3%. If you have extra money in either your checking or savings accounts, it’s worth looking into your bank’s other account offerings to see if there’s a better place to stash your cash.
You may already have an ATM or a debit card attached to your checking account, but your bank may also offer its own branded credit card. Because plastic is big business, many banks are willing to throw considerable perks your way if you sign up for a card – including introductory cash bonuses, cash and travel rewards programs and extra awards points for existing customers. Of course, your bank may not offer the card that would work best for you, so it pays to shop around to find the best deal.
One way that banks make money is to accept deposits, then use that money to extend loans to customers. A key structure of credit unions, for example, is to create a cycle of mutual assistance in which one member’s savings turns into another member’s loan. In addition to the standard mortgage and auto loan programs, most banks also offer home equity lines of credit – which allow you to borrow against the equity in your home – plus refinance loans, personal loans, private student loans and small business loans. Keep in mind that your bank may not offer the best loan terms or rates, so it’s a good idea to compare offers from other banks (both brick-and-mortar and online ones) before making any decisions.
A safe deposit box (sometimes called a safety deposit box), is an individually secured container that lives in the vault of an insured bank. You may be able to rent a safe deposit box from your bank to keep your important personal documents – such as contracts and business papers, military discharge papers, physical stock and bond certificates – secure, along with collectibles and family heirlooms.
As you’ll have access to your safe deposit box only during banking hours – and probably not on weekends and holidays – you should only store items that you won’t need in an emergency. Passports, medical directives, durable powers of attorney and other documents that you may suddenly need are better kept in a secure spot at home. Note that the contents of the box are not insured in the same way as the cash in your checking and savings accounts. If you want coverage for items in your safe deposit box, you’ll have to buy the insurance yourself. A rider on your home insurance policy is a good place to start.
A trust account is a fiduciary arrangement in which a designated third-party trustee controls assets on behalf of another person or group, known as the beneficiary or beneficiaries. The trustee is often a family member, attorney or accountant who has accepted responsibility for managing the account – but it can also be your bank’s trust department. (For more, see Should You Put Your Faith in a Trust?)
Typically, banks provide two primary trust services: trust administration and investment management. As a trust administrator, the bank’s trust department can serve as the sole trustee or co-trustee with another person to make sure the account is handled in accordance with the trust terms, which might include disbursing checks and property, managing securities for the account, filing state and federal taxes for the trust, and maintaining proper insurance for the trust assets. Banks may charge an annual fee for these services or bill on an à la carte basis, where each service incurs a specific charge.
As an investment manager, the bank’s trust department can manage the trust assets and invest and divest assets according to the trust documents. These portfolio management services typically cost between 1% and 2% of the net assets under management, subject to a minimum fee. While most banks stick to traditional investments, such as stocks, bonds, cash and real estate, some specialize in specific asset classes. A Texas bank, for example, may focus on investments in cattle and oil rights, whereas a bank in New York City may specialize in real estate.
Terms such as “bank,” “credit union” and “savings bank” are often used interchangeably, but there are some distinct differences. Banks, for example, are community, regional or national for-profit corporations that are owned by private investors and overseen by a board of directors elected by stockholders.
Credit unions, on the other hand, are nonprofit financial cooperatives that are member-owned and run by a board of directors chosen by its members. The members typically share a common bond (known as the credit union’s “field of membership”), such as working for the same employer or belonging to the same school or labor union. (For more, see 6 Benefits of Using a Credit Union.)
Finally, savings institutions (commonly called savings banks) specialize in real estate financing. They are governed by an elected board of directors and are owned by either a corporation or a mutual – a private company where ownership is shared among its clients or policyholders. Savings banks always have “SSB” or “FSB” after their name to specify if they are a state savings bank (SSB) or federal savings bank (FSB).
While all these entities offer the same basic banking services (e.g., checking and savings accounts), banks focus on business and consumer accounts; credit unions emphasize consumer deposit and loan services; and savings banks concentrate on real estate financing.
Banks offer a range of services beyond checking and savings accounts. You can find out about your bank’s lineup of services by visiting its website, calling the customer service number or stopping by for an in-person visit at a local branch. If your bank doesn’t offer the services you need, it may be time to find a new one, whether that’s a brick-and-mortar credit union in your hometown or an online bank that offers great rates.
Keep in mind that your bank probably offers several versions of its accounts – it may, for example, offer student, relationship, premier and “golden” checking accounts. Because these various accounts offer different perks, it pays to call your bank (or look online) to ensure that you have the best account for your financial situation. If you maintain a minimum balance in your checking account, for example, you may be able to avoid the monthly maintenance fee. Similarly, if you are an older adult, you may qualify for “free” checking with no monthly fees and no account minimums. Whether you’re shopping for a new account or making sure an existing account still makes financial sense, it’s a good idea to look into the range of services banks offer.