For many people, the first financial institution they deal with, and the one they use most often, is a bank or credit union. That’s because banks and credit unions provide a safe and convenient way to pay your bills and accumulate savings, as well as other services that can help you to manage your money.
Banks offer two main products:
- Transaction accounts, better known as checking accounts, which allow you to transfer money by check or electronic payment to a person or organization that you designate as payee
- Deposit accounts, also known as savings accounts, which pay interest on your money in those accounts
In most banks, you can transfer cash electronically from your transaction account to your savings account, and vice versa.
Banks also provide other important services. For example, you can purchase guaranteed bank checks, sometimes called cashier’s checks, which ensure the payee that the funds needed to cover the check are available. Some providers of goods and services require guaranteed bank checks to limit their risk of non-payment. If you need a signature guarantee on an application or other official document, your bank will normally provide one. And, in most cases, banks are also the place you go to borrow money when you need it, through lines of credit and loans.