CHAPTER 23 SECTION 1 Section 1 Objectives: -Name and describe the four major types of financial institutions. -Discuss how electronic banking may change money management.

Types Of Institutions and Services A bank used to be place to go to save money, borrow money, or open a checking account. Commercial banks may also be known as bank and trust companies or community banks. Commercial banks are the most common type of financial institution. They are full-service banks, banks that offer customers a full range of financial conveniences and services. Automated teller machines ( ATM ) (Cont.)

Mutual Savings Banks ATM- is an electronic terminal which customers can insert a plastic card to withdraw cash, make deposits, or transfer funds to another account. Mutual savings banks began early in the 19 th century in order to serve ordinary people that commercial banks often overlooked. A board of trustees directs the banks operations and acts on behalf of the depositors. One of the main attractions of mutual savings banks is that they often pay a slightly higher rate of interest than commercial these banks.

Savings and Loan Associations Other names for these institutions are building and loan association, cooperative banks, saving associations, and homestead associations. They were stared in the early 1800s by groups of people who pooled their savings so that each person, in turn, could borrow enough money to build a house. Saving and loan associations are now in all states.

Credit Unions Credit unions (CU’s) are nonprofit savings and loan cooperative associations. They only accept savings from and make loans to people who belong to the credit union. Credit unions provide savings accounts, consumer loans, and financial counseling. A convenient feature of CUs is that members can often make deposits and loan payments through payroll deductions.

Changes in Financial Institutions During the last several decades, many banking laws have been changed to allow financial institutions to be more competitive. Another results of the changes is that the four major types of financial institutions have begun to offer similar services. Financial institutions now actively compete for business.

Electronic Banking Electronic banking is a broad term used to describe various types of electronic fund transfers ( EFTs ) Telephone banking systems, these systems permit you to telephone your bank and instruct it to pay Electronic banking can be very convenient.