Commercial banks offer the widest range of financial services for consumers. Commercial banks accept deposits from consumers, and in turn, lend money based on those deposits. As opposed to investment banks, commercial banks mostly deal with deposits and loans, rather than capital market activities. Many commercial banks also engage in other services such as selling insurance products and buying corporate and government bonds. Savings and Loan Associations Savings and loan associations specialize in accepting deposits and making mortgage loans.
This kind of institution typically has lower interest rates than commercial banks.Savings and loan associations are generally mutually held, where the customers (depositors and lenders) are members who have some degree of control over the organization’s management. Savings Banks Savings banks cater to those consumers (typically those who deposit small amounts of money) who weren’t being served by larger commercial banks. Generally, savings banks focus more on retail banking and have decentralized distribution networks.
Credit Unions Credit unions are institutions owned and controlled by their members. They differ from other institutions in that the members who have accounts in the union are also the union’s owners.Credit unions often have higher interest (dividend) rates for savings (shares) than banks or other financial institutions. They also have lower interest rates for loans than banks. Consumer Finance Companies In many countries, consumer finance companies offer considerably higher interest rates for loans than other financial institutions, especially for unsecured loans.
They cater to consumers who cannot get loans from other financial institutions, such as banks. Consumer finance companies often engage in unsecured, auto-secured, or home equity-secured loans. They also lend money and collect debt for store installment loans.
