Do all banks appear the identical? In that case, you may need to take a better look. In spite of everything, there are greater than 10,000 banks within the U.S. alone, and each presents its personal distinctive set of companies, department places, account charges, rates of interest, and extra.
Regardless of the huge variety of choices, nearly all of individuals give their enterprise to only a few dozen megabanks. However if you default to one among these massive monetary establishments, you could possibly be lacking out on main perks, like excessive rates of interest in your deposits, low charges, customized companies, and extra.
Given the sheer quantity of choices, how are you going to select the place to take your cash? One method to slim it down is to know the several types of banks and what each does.
A central financial institution is not the sort of financial institution the place you may grow to be a buyer, however these establishments are essential nonetheless. Central banks assist regulate nationwide economies by making insurance policies that influence the cash provide and the price of borrowing.
Within the U.S., the central financial institution is the Federal Reserve. It’s made up of 12 separate Federal Reserve Banks situated across the nation. A few of the most vital capabilities they carry out embrace lending cash to different banks and implementing client safety legal guidelines.
When you concentrate on the massive banks you are most acquainted with, they’re doubtless industrial banks. For instance, JPMorgan Chase, Wells Fargo, Financial institution of America, and Citibank are 4 of the most important industrial banks within the U.S. These banks’ primary obligation is to earn a living for his or her shareholders.
Business banks provide financial institution accounts and loans for particular person clients, in addition to for small and medium-sized companies. These banks are handy choices in your day-to-day banking wants, since they have a tendency to offer you quite a lot of methods to deposit, withdraw, and switch cash, together with in-person, on-line, or through apps.
Nonetheless, when you’re in search of the bottom banking charges or highest rates of interest in your financial savings and CD deposits, you will most likely need to attempt a web-based financial institution, a smaller financial institution, or a credit score union.
Nationwide banks are a kind of business financial institution. These massive establishments are regulated by the federal authorities, however they’ll function in any state. A lot of them are recognizable as a result of they’ve the phrase nationwide of their names, equivalent to 1st Nationwide Financial institution, Outdated Nationwide Financial institution, and Peoples Nationwide Financial institution.
Learn extra: These are the 20 largest banks within the U.S.
Regional banks are banks which have $10 billion to $100 billion in belongings. That may sound like some huge cash, however by comparability, Financial institution of America manages over $2.5 trillion.
Regional banks usually function throughout a number of states, with nationwide and even world ATM networks. In addition they provide all the identical companies as massive, nationwide banks, however are inclined to have extra ties to their communities, together with by charitable giving and native volunteer work.
A regional financial institution is usually a good selection if you would like your cash to return into your group, or if you would like higher charges in your deposits and loans than you’ll get from a bigger financial institution.
A group financial institution is a financial institution that has lower than $10 billion in belongings. Neighborhood banks often have all of their branches situated in a restricted geographic space, equivalent to a county or city, and so they usually provide companies tailor-made to individuals who dwell within the space.
Their expertise won’t be top-of-the-line when in comparison with some huge banks, however most group banks have the principle companies you want as a buyer, equivalent to banking apps and cellular verify deposit.
A group financial institution is likely to be onerous to search out in your space, since their total numbers have been shrinking in recent times. However they’re nonetheless an excellent choice if you would like a extra customized, face-to-face expertise than you get from a significant financial institution.
Neighborhood banks can be a sensible choice for individuals with no credit score or low credit since some are extra versatile with mortgage {qualifications} than huge banks. Moreover, they usually concentrate on small enterprise loans.
Funding banks primarily work with huge companies and companies. In case you personal a enterprise, one among these banks can doubtlessly serve you in a number of methods, together with serving to you make investments cash and securing capital for you in trade for fairness.
Nonetheless, you will doubtless must go elsewhere in your on a regular basis enterprise banking wants, as funding banks do not often provide merchandise like checking accounts. In addition they are inclined to cost increased charges than industrial banks.
On-line banks, also called digital banks, solely provide their companies on-line and through banking apps. When you can doubtlessly entry your online-only checking account by an ATM, on-line banks do not have bodily branches the place you may go to do issues like deposit and withdraw money.
A few of the bigger on-line banks you could have heard of are:
As a result of online-only banks do not have bodily places, their overhead prices are decrease than different sorts of banks. This enables them to move on their financial savings to clients within the type of excessive charges on deposit accounts, aggressive low charges on loans, and low banking charges.
In case you’re comfy managing your cash nearly completely on-line (or simply going altogether cashless) a web-based financial institution is usually a profitable selection. On-line-only banks are additionally helpful when you dwell in a rural space the place there are not any banks close by, assuming you’ve gotten an web connection.
Neobanks aren’t technically banks — they’re monetary expertise (fintech) firms that supply banking companies in partnership with chartered, FDIC-insured banks.
Like on-line banks, neobanks provide digital-only companies with an emphasis on tech-forward improvements and enhanced consumer expertise. In addition they have comparatively low charges. Nonetheless, neobanks sometimes provide a small vary of core banking merchandise, equivalent to commonplace checking and financial savings accounts and high-yield financial savings accounts.
Neobanks will be enticing choices for individuals who wrestle to qualify for a checking account or bank card since they usually have versatile necessities to qualify, and so they provide merchandise to assist with entry to banking. For instance, Chime presents each a secured bank card and a second-chance checking account.
Learn extra: The 5 finest neobanks and fintech firms of 2025
9. Financial savings and mortgage affiliation
Financial savings and mortgage associations (S&Ls), additionally known as financial savings banks or thrifts, provide fundamental banking companies, however they cater primarily to people (not companies) who want the next merchandise:
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Mortgage loans
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Financial savings accounts
You’ll be able to acknowledge a financial savings and mortgage affiliation by its identify: They both finish within the letters SSB (for state financial savings financial institution) or FSB (federal financial savings financial institution).
In 2025, there are just below 250 lively federal financial savings banks within the U.S. These banks can both be cooperative, that means the purchasers are additionally members who personal the financial institution, or company, that means shareholders are the house owners.
Banks and credit score unions are each monetary establishments. They provide lots of the identical companies, however they do have key variations.
Whereas banks are for-profit companies owned by personal buyers, credit score unions are nonprofits owned by their members. Because of this, credit score unions are often in a position to provide decrease account charges and rates of interest on loans, in addition to excessive rates of interest on deposits.
Credit score unions even have extra merchandise meant to assist people who find themselves struggling financially, equivalent to Payday Various Loans.
One of many potential drawbacks of credit score unions, nevertheless, is that they require you to satisfy sure {qualifications} for membership. For instance, you or a member of the family who’s already a part of the credit score union could should dwell in a sure geographic space or work in a particular trade.
Learn extra: 7 credit score unions anybody can be part of
As you may see, you’ve gotten quite a lot of choices in relation to the place you financial institution. To pinpoint the perfect financial institution for you, ask your self these questions:
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What’s out there in your space?
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Do you favor digital or in-person banking?
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What services and products do you want instantly and over the following few years?
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Would you like a financial institution that invests locally?
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Are excessive deposit charges and low mortgage charges your primary precedence?
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Do you want a financial institution that works with low credit or unfavorable banking historical past?
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For credit score unions, do you meet their membership necessities?
Relying in your solutions, you might discover that the perfect kind of financial institution is not essentially the massive nationwide banks you see on each different nook. For a lot of customers, your wants can be higher met by a smaller establishment that provides aggressive rates of interest with strong on-line companies and simply accessible ATMs.
Learn extra: Information to selecting a financial institution for the common client