There are four types of financial institutions in the United States: commercial banks, savings and loan associations, credit unions, and investment banks. Each type of institution offers different services and products to its customers.
Commercial banks are the most common type of financial institution. They offer checking and savings accounts, loans, and credit cards to consumers and businesses. Commercial banks are for-profit entities that are regulated by state and federal banking laws.
Savings and loan associations (S&Ls) are another type of common financial institution. S&Ls typically offer higher interest rates on deposits than commercial banks do. They also focus on making home loans to consumers. Like commercial banks, S&Ls are for-profit entities that are regulated by state and federal banking laws.
Credit unions are not-for-profit organizations that offer similar services to commercial banks but without the same level of regulation. Credit unions typically have lower fees than commercial banks do but may have fewer branches or ATMs available.
Investment banks are a type of financial institution that focuses on helping other companies raise money by issuing stocks and bonds. Investment banks also trade stocks and bonds on behalf of their clients. Unlike commercial banks, investment banks are not subject to as much regulation from state or federal governments.