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What are the various classifications of banks?

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Quick Answer

Three major types of banks accept savings deposits in the United States, including commercial banks, thrifts and credit unions, according to the State of Connecticut, Department of Banking. Seven types of banks offer different services, explains Justin Pritchard for About.com.

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Full Answer

Commercial banks make profits for shareholders by receiving deposits, holding deposits in accounts, extending credit to customers and facilitating the movement of funds. Thrifts, also known as savings and loans, specialize in mortgage lending for homeowners. Deposits of customers turn into mortgage loans for customers, and these institutions make money on the interest of loans. Credit unions pool the money of depositors to make money off of investments. Membership in credit unions is often limited to a particular group, such as employees of a company, notes the State of Connecticut, Department of Banking.

Other types of banks include retail banks, investment banks, online banks and central banks, according to Pritchard. Retail banks deal directly with retail customers and offer many types of services. Retail banks have savings accounts, checking accounts, certificates of deposit, credit cards and consumer loans, explains Investopedia. An investment bank assists people, companies and groups in investing money through different means such as stocks and bonds, notes Pritchard. Investment banks may assist with mergers and acquisitions, and these institutions can also help companies raise money by issuing stocks and bonds for customers.

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