What Type of Bank Do You Really Need?

Choosing the right bank is critical to your future financial health. With so many choices out there, however, it can be difficult to choose exactly the right one for your needs. What type of bank do you really need? How can you be sure you've chosen the right one? Better understanding the different types of banks can help you make a more effective decision for your personal banking needs

Commercial Banks

Commercial banks, or commercial departments within larger banking institutions, are generally geared toward corporate clients. They may offer business financing, including interest rates and lines of credit specifically designed for larger business customers, or to help with commercial real estate loans.

You may need to work with a commercial bank if: 

• You are a business owner who needs a solid relationship with your bank
• You need to secure a business line of credit
• You're thinking about starting your own business

Consumer Banks

Consumer banks are exactly what they sound like: banks designed for the average consumer. You may want to be part of a consumer bank if: 

• You have standard banking needs.
• You want to open a bank account.
• You need to secure a private loan.

Having a strong relationship with your current consumer bank can make it easier to obtain loans and deal with any challenges you may face during your interactions with your bank.

Investment Banks

Investment banks are geared toward providing investment opportunities for their customers. You may need an investment bank if you're interested in investing and want to learn more about what it has to offer, or if you are looking for new opportunities for investment but prefer to keep all of your financial interactions under one roof. Consider an investment bank to handle:

• Investing your own money for greater returns
• Allowing the bank to invest money on your behalf to improve your return
• Handling mergers and acquisitions through your business

Community Development Banks

Community development (CD) banks focus on serving people in low-income or under-served communities. CD banks are designed to help serve people who may not have had access to banking services in the past, but who are interested in taking advantage of what they may have to offer now. You may need a CD bank if: 

• You live in a low-income community.
• You have relatively little or inconvenient access to other banking institutions.
• You have any issues that could make it difficult for you to open or maintain an account at another bank.

CD banks are designed to support under-served populations and make it easier for them to get access to loans, bank accounts, and more. They may also provide more financial literacy support to their users.

Credit Unions

Credit unions are, rather than being owned by shareholders, owned by their members. Any profits made by a credit union are passed on to the members, rather than being held by the bank itself. Credit unions are ideal for you if:

• You want a local, community-focused bank.
• You are interested in an option that offers fewer fees and lower interest rates.
• You have the right link to the credit union. For example, you may need to live in a specific geographic area to join.

Savings and Loan Associations/Thrifts

Savings and loan associations, or thrifts, help their members build toward homeownership. They may offer many of the same options as federal banks, but focus heavily on mortgages and other home loans. You may want to join a thrift if: 

• You're interested in buying a home in the near future.
• You need additional support to help make homeownership possible.

Which Bank Type is Right for You?

A consumer bank will typically fit the needs of most consumers. That said, choosing a specialty bank could help you reach your goals more effectively. Take a look at the available bank types in your area, consider your needs, and consider scheduling a consultation with a representative before making your final decision.