Investment Apps and Websites

Should I Use The Investment Services At My Bank? What You Need To Know

Should I use the investment services at my bank? It’s a common question most bank account holders ask themselves. To answer this question, we are sharing with you essential information on whether it’s a good call to invest or not to invest at your bank.

should I use the investment services at my bank

Traditionally, we see a bank as a platform or a place where we can save up. It is where we safe-keep our hard-earned money, and also, it’s somewhere where we can grow our funds.

Over the years, however, many if not all banks started offering investment services to their clients. This is on top of the standard consumer banking services they offer.

Primarily, the banks’ in-house investment services may be targeted at high-net-worth individuals, which means, if you are just a newbie in investing, most likely, your bank will not try to get in touch with you and offer such services.


However, that does not mean you cannot take advantage of these services — of course, you still can. It’s just that it’s going to be a personal initiative and not the other way around.

Banking rather banks have indeed grown from what it was before to what it is now. Well, with them providing almost anything and everything finance-wise, it’s safe to say that they’re like a one-stop financial services shop.

Today more than ever, banking customers are pushed to use banks in all their financial needs — which includes investing. They are pushed to use their banks’ in-house financial advisors in order to get a bigger share of their wallets, according to an article by Forbes.

Furthermore, on this day and age, “tellers and bank employees are trained to cross-sell and fill their daily quota of ‘hits’ by encouraging you to not only do your checking with them, but also mortgages, personal loans, and of course investing your life savings,” says Forbes.

So, having said all that, should you use the investment services at your bank?

To help you answer this question, here are a few important matters that we are going to discuss. These things will help you understand whether or not investing at your bank is a good idea, at the same time, it will help you come up with an informed decision.

Here are some of the things we are going to focus on:

  • Does FDIC covers investments?
  • How do investment services work?
  • How to choose the right investment service?
  • How to choose a financial planner?
  • What are the basics of the stock market?
  • How do fees fair in making investments through banks?
  • What are the pros and cons of investing through banks?


As an investor, whether new or not, it is important to look into this aspect. Make sure that you are fully aware of whether investment services and accounts are covered by the FDIC or not.

So, for your information, the answer to the question is NO.

The Federal Deposit Insurance Corporation or more commonly known as FDIC does not cover investment services and accounts offered by banks. The FDIC only guaranteed deposit accounts you have with the bank.

Furthermore, because of the ever-changing nature of the stock market, the insurance company does not guarantee investment funds.

However, this does not mean you can no longer use your bank in investing. You certainly can. The thing is, your money is not guaranteed against market losses when investing it regardless of the investment firm you opt to invest in.

While your investment funds with a bank are not protected by FDIC, fortunately, it is still protected should the bank go through fraud or falls into bankruptcy.

It is the Securities Investor Protection Corporation (SIPC) that will step in to provide a safety net should your bank gets into trouble. However, similar to FDIC, SIPC will not cover if you lose money due to a drop in the market value of your investments.

When it comes to the protection provided by SIPC, it is quite the same as FDIC insurance coverage wherein you will have $250,000 of coverage for cash in your investment account. SIPC provides $500,000 total amount of coverage, which already includes the $250,000 cash coverage per customer. This is applicable for all of the accounts you hold at any one bank or brokerage.

Given this coverage, it definitely will make investors or bank clients feel safer when it comes to investing instead of keeping your money in a savings account that comes with very minimal interest annually.

Overall, although investments are not covered by FDIC, we can say that investing through banks is generally safe and secure.

If based on this, if you are thinking, “Should I use the investment services at my bank?” we’d say, go ahead. As mentioned, it is generally safe investing in your bank.


The kind of investment services your bank provides is likely comparable or the same as what investment firms provide.

What makes the difference though is finding a financial planner or adviser who you feel at ease worthing with. He or she should be willing enough to cater to all your queries when it comes to investing particularly about the products you are eyeing for.

Should you encounter a financial advisor or planner who does not meet your needs — someone who seems unwilling or unable to answer all your questions regarding investment products — then, it’s better to choose and/or look for a more reliable one.

Finding a financial planner or adviser is crucial because he or she has to ensure you fully understand everything about certain products. Needless to say, he or she has to be very helpful and willing to assist anytime you need one.

Remember, we are talking about your hard-earned money here. The last thing you want to happen is to put your money to waste, right?


As mentioned, choosing the right financial planner or advisor is crucial as he or she plays an important role especially when it comes to your decision-making.

Also, your financial planner or adviser must be able to assist you in choosing the right investment service or services, which include:

  • Money Management – This basically refers to a step wherein an investor has to ascertain the amount of money he or she has for his or her disposal for investing as well as other different financial options available to help maximize returns and tax rebates and minimize risks.
  • Portfolio Management Services – This type of service is aimed at investors achieving the right mixture of investments like bonds, commodities, stocks, CDs, and more depending on their financial goals as well as risk appetite. It encompasses making a choice between debt and equity, as well as domestic and international investments, and growth and safety.
  • Retirement Planning Services – Obviously, this particular service deals with retirement goals. Once everything is laid down, the right investments have to be made into pension plans, profit-sharing plans, as well as 401(k) plans.
  • Collective Investment Portfolio Management – This refers to mutual funds, managed funds, and ETFs.
  • Brokerage Services – Brokerage services include trading in bonds, stocks, foreign currency, and derivatives. Compared to other financial institutions, the brokerage services offered by banks are considered more reliable and are often preferred as compared to those being offered by individual brokers.

He or she must be able to help you in your investment journey particularly on the process of choosing the right investment service or services. He or she must also be of help in the following:

  • Reviewing your needs and goals
  • Looking into how long you are able to invest
  • Making an investment plan
  • Checking on fees and charges
  • Deciding what investments to consider and what to avoid
  • …and more

To be honest, investing is not as simple as putting money in a savings account. You have to be knowledgeable, you need to be wise where to put your funds into.

But let’s face it, some if not many of us do not have much time to master the art of investing – that is why a financial planner or advisor would be of great help – so let’s move on to how to actually choose a financial planner.


When it comes to making an investment, finding a financial planner is part of the process. In fact, it is an important process.

When looking for the right financial planner, it’s absolutely okay to look at several candidates. The more options, the better. This includes both financial planners from your bank and outside of your bank.

In addition, you may also consider finding out the policy if in case your financial planner changes from one company to another.

It is in fact important to know this. For instance, what if your chosen financial planner resigns from the bank, what will happen to your account? Will it be assigned to a different planner? What if you want to stay with the bank or financial firm, will you be allowed to choose your new planner or you will need to stay with whoever is assigned to you?

These are all important aspects of your investment journey. So, make sure to look into these details as well.

You see, the role of a financial planner or adviser is very critical. He or she is someone you can turn to for investment advice. He or she is like your partner in managing your money — take note, your hard-earned money.

So, when looking for a financial planner, make sure to ask about the services offered through your bank, interview potential planners, and once you’re done, then, that’s the only time you make a decision.

Additionally, when choosing a financial planner, choose that person not just because he or she works for the bank or the firm, but because he or she has the capability to co-manage your funds, and helps you grow your money.

Meanwhile, if you want to know the common mistake people make when using a financial planner or advisor, here’s a very informative video clip from The Dave Ramsey Show:


So, we have already tackles about whether or not FDIC covers investments, and also about finding the right investment service and the right planner. This time around, we are going to talk about something that is very important for every person who plans to invest to know – the stock market.

First and foremost, what is the stock market?

According to Investopedia, the stock market refers to “the collection of markets and exchanges where regular activities of buying, selling, and issuance of shares of publicly-held companies take place.”

Additionally, these financial activities are “conducted through institutionalized formal exchanges or over-the-counter (OTC) marketplaces which operate under a defined set of regulations.”

If the stock market is totally new to you, and you want to or are interested to jump into it, the best thing to do is to seek advice from a financial planner who is knowledgeable and who understands the markets as well as the products available out there.

One very common product is mutual funds, which help reduce the overall investment risk as they spread risk through the stock of various different companies instead of just a single one.

It is important to note that any individual stocks you buy have a greater risk. Why? Because if a company fails, the stocks automatically could become worthless. That fast!

To put it simply, be sure that you are ready to invest and that you know what you are buying before jumping in. Otherwise, you might just regret it.

When investing, make sure to use only your spare money, which refers to funds that you are not using for living costs or to pay for any big expense soon. Make sure the money you are using is not the same funds you will use on your monthly needs. Otherwise, it’s not going to work.

Make sure that your investment fund is totally different from your monthly budget. Also, see to it that your budget has enough room to protect your savings and investment accounts at the same time meeting all your regular financial obligations.


Still thinking about — “Should I use the investment services at my bank?”

Well, here’s another important thing that you need to know when it comes to availing investment services at your bank.

You know what they say — nothing is free? Does everything come with a cost? Well, that is true when it comes to using investment services at your bank.

Banks are usually controlled by large corporations. These publicly-traded corporations are normally tasked with creating or shareholder value and these shareholders want to see big income margins.

So, to ensure banks and credit unions meet that, they tend to be the biggest seller of expensive as well as costly investment products such as Mutual Funds and Variable Annuities — this one is according to the same Forbes report we mentioned earlier.

But apart from selling costly products, banks also charge fees for their services, and guess what? It may be a little costly, too. For instance, according to Forbes, “the average mutual fund can run around 3% a year in fees, so after you tack on 1.20% you’re paying the bank and the advisor behind the desk a whopping 4.20% per year.

See that? But the advantage of that would be — you won’t get into the hassle of managing these accounts. They do it for you.

Take note that fees and charges differ from one investment service to another, and from one bank to another.


So, this time around, let’s look into the advantages and disadvantages of investing through banks.


  • Most of the time, you get excellent and well-knowledgeable people to help you manage your investments.
  • Most banks especially the big ones have a solid foundation and are credible, which means they are likely to handle your money well.
  • They can provide you with the right financial planner or adviser.


  • It’s not insured by the FDIC.
  • Banks have limited investment options.
  • Banks tend to have expensive, costly investment options.
  • There are higher trading costs.
  • Banks tend to give biased advice.
  • Banks tend to have a less impressive trading platform because of the nature of the business.


The thing about banks is that people tend to feel secure when dealing with them. Since they are in the business of safekeeping people’s money, customers have that feeling of security and safety with banks. That is why it is not surprising that clients consider entrusting everything to the bank including investing.

Investing is broad. To be honest, it takes a while before a newbie could understand fully the whole concept and the proper way or ways of investing. While doing it yourself is doable, sometimes, having someone else do it for you is better especially if you have no time or you have not enough knowledge about the business.

Banks are well-trusted institutions. As mentioned, we see banks as the most reliable institution when it comes to handling finances.

So, if we were to answer the question, “Should I use the investment services at my bank?” We’d say it depends. If you have the ability to manage your own investments, then go ahead and manage it yourself. Otherwise, entrust it with the bank. In the end, as long as you have the capability to pay for such services and you have the confidence that the bank will take care of everything, then that’s the end of discussion.

Investment Apps and Websites

7 Best Ways To Insure Excess Bank Deposits

Knowing and understanding the best ways to insure excess bank deposits will definitely help you become more confident that whatever happens to the bank of your choice, your funds are good.

best ways to insure excess bank deposits

Have you ever thought of what’s going to happen to your money if your bank went sinking?

It’s probably a nightmare for some.

But guess what? Bank failures actually happened already in the past.

According to the Federal Deposit Insurance Corporation (FDIC), because of the financial crisis that happened back in 2008, 465 banks shut down in a span of four years.

Because of what happened, the banking industry had an increase in the insured account limit by the FDIC.


But the thing is, what if you have more than the limit? What are the best ways to insure excess bank deposits?

Well, that’s precisely is what we are here for. We are going to share with you different ways to keep your funds safe from the risks of uninsured losses should the unlikely happened to your bank (which is feasible especially these days when the pandemic is hurting the economy really bad).

But before we share with you some of the best ways to insure excess bank deposits, we find it necessary that you must understand first the following:

  • What does “excess bank deposit” mean?
  • What are FDIC limits?
  • How to maximize FDIC coverage through CDs and CDARS?
  • What causes bank failures?
  • What happens if an FDIC-insured bank fails?
  • How to insure excess bank deposits beyond FDIC limits?
  • How to not lose cash due to bank failures?


Before we even talk about the best ways to insure excess bank deposits, let us first know and understand what “excess bank deposit” means.

Actually, the meaning is pretty obvious. This basically pertains to the money or funds you have in the bank in excess of the amount that FDIC insurance covers.

For example, you have $500,000 in the bank. However, FDIC can only insure up to $250,000 worth of deposits per account. This means that the remaining $250,000 will not be covered by the FDIC.

So, if the bank fails, it means you will lose the other half of your money in the bank. That is why it is important to find ways to insure excess bank deposits so in case a bank failure happens, your money won’t disappear just like that.

If we may just say, this topic is timely given the current situation in the country, and in the world. The current pandemic brought by Covid-19 greatly affects the economy. In fact, so much that we won’t be surprised if bank failures happen in the next few months. Hopefully not, but that is very likely to happen, and we must be prepared for it.

Having said that, let’s proceed to know what the FDIC limits are —


First and foremost, who is FDIC?

The Federal Deposit Insurance Corporation or more commonly known as FDIC is an independent agency of the federal government that was “created in 1933 in response to the thousands of bank failures that occurred in the 1920s and early 1930s“.

In its website, it says that FDIC “preserves and promotes public confidence in the U.S. financial system by insuring deposits in banks and thrift institutions for at least $250,000; by identifying, monitoring and addressing risks to the deposit insurance funds; and by limiting the effect on the economy and the financial system when a bank or thrift institution fails.”

Since the inception of FDIC insurance, “no depositor has lost a single cent of insured funds as a result of a failure.”

Oh, if you want to know more about FDIC, here’s a quick how it works video from FDIC Channel on YouTube:

As mentioned, all FDIC-insured banks have insurance coverage of up to $250,000 per depositor, per bank. This basically means that up to $250,000 of a depositor’s money, spread across deposit accounts, is covered in the said insurance per bank.

When we say deposit accounts, this includes:

  • Checking accounts
  • Savings accounts
  • Certificate of Deposits (CDs)
  • Money market accounts

In the case of a joint account that comes with equal ownership, each of you is insured up to the same amount, which is $250,000. That means getting a total of $500,000 worth of FDIC insurance.

Using the FDIC’s Electronic Deposit Insurance Estimator (EDIE), depositors can calculate coverage for a particular group of deposits.

Meanwhile, to find an FDIC-insured bank, you can simply use the FDIC’s search tool to find out what you are looking for.

Unlike other forms of insurance, FDIC insurance does not cost anything. More so, there are no forms that need to be filled out.


There are handful companies out there that are willing to put your cash in various certificates of deposit, money market, as well as savings accounts under your name for a certain amount to help ensure that you get enough coverage from the FDIC. Doing so will help protect your money up to a single centavo.

While there are a lot of options to choose from, one of the most popular and well-known services to spread your funds across banks is the Certificate of Deposit Account Registry Service or CDARS.

CDARS works with a network of banks to keep your deposits insured in accounts under the $250,000 FDIC insurance limit.

If you have millions in cash assets, this may be very worth it.

Now, if keeping your money locked in CDs does not sit right with you, you may consider other options like CDC deposits. This one’s just the same as it puts funds in the money market accounts instead of CDs. More so, CDC Deposits has a positive social mission that high-net-worth customers can feel safe and secured about supporting.

Either way, whether you choose CDs or CDARS or both, you get a single deposit account with just one 1099 form, and also it also comes with one point of contract.


Before we talk about what happens to an FDIC-insured bank if it fails, we thought it is also important that you have an idea of why bank failures actually happen.

Generally speaking, banks fail when they are no longer able to meet their obligations as an institution. Banks may either lose too much on investments or in some cases, are unable to provide cash when customers demand it.

Bank failures happen when banks are not able to keep your money in vaults. If you are not aware, the moment you deposit cash in the bank, the bank automatically invests that money. One example of investment is through making loans to other bank customers. By loaning money, the bank earns interest, at the same time, they get to pay you interest on your deposits.

But apart from that, banks also invest in more complicated ways. Now, if the bank takes large losses in any one aspect, it may eventually fail.

Let’s just say that banks need to be very articulate and careful when investing to ensure that it won’t fail. However, sometimes, there are just things beyond their control, and when that happens, again, the unlikely may happen.


As we have said earlier, banks fail, too. Yes, it’s inevitable, and in fact, it may happen anytime.

But what actually happens if an FDIC-insured bank fails?

If an FDIC-insured bank goes out of business, the failed bank’s deposits will be transferred to another FDIC-insured bank. However, if that is not possible, what happens is, depositors will get a check from the FDIC up to the amount of coverage for their deposits, which is $250,000 per person.

This scenario usually raises the question — what happens if you have more than $250,000 in the bank? Based on our example earlier, only $250,000 of the total deposited amount is covered. The rest is unfortunately not covered by FDIC anymore, which may mean you will lose the excess amount. That is why ideally, as much as possible, financial experts suggest keeping your deposited amount within the FDIC-insured limit so as to avoid losing your hard-earned money due to bank failure.

Having said that, let’s process to how you can actually insure excess bank deposits —


So, now that you already know what FDIC is all about and how much the FDIC limit is, let’s proceed to the best ways to insure excess bank deposits. This is ideal and most applicable to those with over $250,000 in their bank accounts (whether it be single or multiple accounts).

1. Split Your Money in Multiple Banks

As mentioned earlier, FDIC coverage is on a per depositor, per bank basis. So, that means, you can actually get two or more times the FDIC coverage by simply opening accounts in different banks.

For instance, you have $500,000 in bank deposits. You can open another bank account for the other half, which is $250,000, or you can also opt to split it into two new accounts, spreading the amount on each bank equally.

While this may be a little consuming both in starting off and in maintaining the accounts, but if you will look into the benefits you get in the long run, it’s going to be worth it.

2. Try Out Wintrust Financial

Historically available in both Chicago and Milwaukee markets, Wintrust Financial offers another option to spread out deposits beyond the FDIC coverage with a new nationwide focus. By the way, the company is looking out to taking its product on a national level anytime.

Wintrust has a network of 15 chartered banks and they offer insurance of up to $3.75 million for one depositor.

Wintrust comes with a business model that works really well for excess deposit coverage. With this 28 billion-asset company, you will surely not go wrong.

3. Put Your Money in Massachusetts

For some depositors, they opt for a more creative solution to ensure the safety of their money. One example is in Massachusetts, it offers insurance for bank deposits over the FDIC limit. Technically, there is no limit to the state insurance for deposit account via the Depositors Insurance Fund (DIF).

Based on its 2017 Annual Report, the DIF covers a total of 52 banks and insures $14.1 billion in excess deposits beyond the FDIC limit.

Furthermore, while a lot of banks are available only for locals, a certain number of Massachusetts banks would likely take your deposit regardless of the US state.

4. Put Your Money in Brokerage Accounts

If you have funds of over $250,000, one best way to keep those funds safe and secure is by having a brokerage account with trusted institutions like Fidelity or Charles Schwab.

Usually, brokerages offer CDs from various banks across the country as part of their suite of available products.

Apart from the convenience of one-stop shopping, usually, you will find yields that are more than the national averages.

Make sure though that your money is divided among non-related banks.

5. Use Credit Unions

Another way to insure excess bank deposits is by putting the excess funds in credit unions.

Just so you know, non-bank accounts get coverage, too.

In fact, credit unions offer similar coverage to that of FDIC through the National Credit Union Administration (NCUA). NCUA is credit unions’ own regulator.

More so, the Securities Investor Protection Corporation (SIPC) fills that role for investment accounts. However, there is a slight difference in terms of limits and rules.

Since investments can lose value, SIPC coverage clearly states that you are not covered for losses due to bad investment decisions.

The coverage though is up to $250,000 in cash per account and $500,000 per customer for all accounts in one financial institution.

6. Get Into Digital Banking

Thanks to technological advancement and the internet, digital banking came to life. It made two things pretty easy.

One, digital banks offer the best rates on both CDs and money market accounts with tools that are very much helpful, and two, opening an account online is made very easy.

While technology is not perfect, what’s good about it is that it continues to get better especially for banks that are becoming known on a national level.

7. Spreading as a Service

Earlier we talked about CDARS. So, by now you probably know already what CDARS is all about.

Anyway, if you are someone who likes the idea of spreading your money on different CDs and money markets, but does not have the time and energy to do the work yourself, then lucky you as there are a few networks that can do that on your behalf.

One of the most well-known is CDARS. You may check with your bank if they do offer this service.

Basically, this is how it works.

Funds that are over $250,000 are deposited in CDs in other banks within the network. Then, the system ensures the money is divided into non-related banks. To be sure, you may check it as well.

Now, if you feel uncertain with tying your money up in CDS, the Promontory Financial Network, the operators or CDARS, added Insured Cash Sweep to its product suite a few years ago, which basically covers transactions as well as savings accounts.

In the same way, CDC deposits also offer a program for money market accounts through the company’s MMAX account.

Let’s face it, it’s pretty much convenient for us to let experts do the work for us. With both programs though, you will get one statement, and 1099 for tax records.


Let’s admit it, it feels really bad to lose money especially if you lose it because of a bank failure. Losing money and not being the one at fault for the loss is even more painful.

That is why it is important to plan ahead, think ahead.

As a depositor, you have to first and foremost, be aware that everything can happen – including bank failures. Do not be too confident with having all your money in just one bank. Yes, even the biggest and largest banks in the world can eventually falter – no one really knows. So, it’s better to be ready for that kind of event.

To avoid losing money because of bank failures, make sure to consider the best ways to insure excess bank deposits, which we have provided above. These actions will surely help keep you out of trouble should the unlikely happen one day.

Again, do not be overly confident. Otherwise, you may end up a mess for losing your hard-earned money for nothing.


Regardless if you are rich or not (but all the more if you have lots of money in the bank), it is important that you are aware of the ways to insure excess bank deposits to avoid getting into trouble someday.

Make sure to know the maximum limit of insured funds, and when you have already exceeded, then, consider doing any of the options we have provided earlier.

How do you find them anyway? Do you see any of those applicable to you?

Well, we have provided you the best ways to insure excess bank deposits, but you have to pick which one is best for you. After all, not because one option worked for one, it will just be the same for another. Nevertheless, all the options we provided are considered safe, secure, and legal.

Investment Apps and Websites

Your Guide On How To Get Started With Banking

Before opening a bank account, it is important to know and understand the basics, as well as how to get started with banking. That way, you can maximize what the bank has to offer, at the same time, take full advantage of the benefits of banking.

how to get started with banking

Let’s face it, all of us reach a certain point in our lives when we will have to manage our finances. As a kid, perhaps you have your parents to manage your money, but once you reach a certain age, you will have to do it on your own.

Financial management, though it sounds overwhelming, is actually simple and easy as long as you know how to work around it. You know the basics, you know where to put your money, etc.

One aspect that is always present when it comes to financial management in banking. People, regardless of age, deal with banks. Banks are like our safe-keepers. They keep our money, ensure that it’s safe and secure and that it is ready anytime we need it. More so, by keeping our money in the bank, we get to earn – maybe not that big, but still, our money earns.

Now, if you are a newbie in banking, it is important to understand how it actually works. More so, you need to know what you actually need, and what you are expecting from a financial institution. That way, it’s easier for you to weigh your banking options, and eventually, choose the perfect bank for you.

Just so you know, according to data published by Statista, currently, there are 4,708 FDIC-insured commercial banks in the United States. That’s a lot!

Now, you know what we mean, right? With so many options around, how then do you choose the perfect one for you?

Well, today, we are going to share with you some of the basics on Before opening a bank account, it is important to know and understand the basics, as well as how to get started with banking. The information we shall be sharing is essential especially to those who are new to the idea of banking.

In particular, we are going to share with you the following information:

  • Definition of Banking
  • Types of Banking Services
  • Account Types
  • Where to Open an Account
  • What to Look for in a Bank Account
  • What to Avoid in a Bank Account
  • Opening a Bank Account


Before we proceed to the process of how to get started with banking, we got to first and foremost, define what banking is. We need to know and understand what banking is all about, and the concept of banking.

A bank refers to a financial institution that is licensed to accept deposits, as well as recurring accounts from the people. It also makes loans to those who need money for specific reasons.

Apart from that, most banks also provide financial services like wealth management, currency exchange, as well as safe deposit boxes.

Whenever we hear the word bank, we thought it refers to just one particular body. What most of us do not know is that there are actually different kinds of banks, which depend on the client they are servicing in. Three of the most common types of banks include retail banks, commercial or corporate banks, and investment banks.

In a lot of countries, banks are usually regulated by either the national government, or by the central bank.

Now, when we say banking, it basically refers to the industry that handles financial transactions such as cash, credit, and many more. Banking may also refer to the act of doing bank transactions or dealing with banks, and the like.

In the United States, banking is known as one of the major drivers of the economy.

If you want to learn more about what banking is all about, you may refer to this video by Kurzgesagt – In a Nutshell:


Now, as part of the process on how to get started with banking, we also need to know the different types of banking services offered by banks. This will help us gauge the right service according to our preferences.

When we say banking services, it basically refers to everything — from savings accounts, to checking accounts, to loans, and more.

As a potential customer or client, it is best to decide which specific banking service or services is/are most important to you, and also, if you are or are not willing to pay for some of these services.

Here are some of the different banking services that banks offer:


To be honest, we find banks as the safest place to store money. Instead of keeping your cash at home, putting it in a “piggy bank,” or carrying it with you, storing it in the bank helps ensure that your money is safe and secure. Don’t worry, keeping it in the bank does not mean you won’t have access to your money. Banks let you easily access your funds anytime (and anywhere) you need them through electronic banking or through an ATM.

Make sure though that you are keeping your money in an FDIC-insured bank or credit union so your money is protected by the U.S. government. So, if by chance the bank where you stored your money fails, your funds will not completely evaporate.


Some of us would want to use banks not just to keep our money, but also to be able to earn interest from it.

If that is your goal, then you got to find a bank that offers a service or services that could help you reach such a goal.

There are bank accounts out there that help you grow your money by paying interest.

In a certain period of time, compounding interest helps grow your original funds into a larger amount of money.

However, please take note that most banks do not pay as much as many investments do.

If your goal is to earn a larger amount of money from your account, then, you better check investment options instead (but that’s for another topic).


Apart from storing and keeping their clients’ money safe and secure, banks are also into the business of lending money.

Banks provide a variety of lending options such as auto and home loans, credit cards, as well as lines of credit for starting a business.


Banks understand that people need easy access to their money. Thus, they provide products like checking accounts, which allows you to write checks against your money in the bank.

Also, banks provide several ways to make electronic payments wherein a lot of them use the Automated Clearing House (ACH) network or electronic funds transfer (EFT) system.

Specifically, banks offer the following features (Please note that features differ from one bank to another. That is why it’s always best to check with your preferred bank first before opening an account with them.):

  • Pay bills online
  • Use your debit card to make payments at retailers or online merchants
  • Move money from one account to another through the bank’s app or via an online banking service
  • Provide account information to companies to be able to pull funds from your account through automatic payments
  • Send money to family, friends, and businesses that you buy from via a third-party app or an online banking service


Most banks, if not all, offer a wide variety of account types that will suit customers with varying needs and preferences.

As a potential bank customer, it is important to be aware of the different account types that the bank offers. That way, it’s easy for you to detect if the bank is ideal (or not) based on your needs.

Here are some of the common types of accounts that banks offer:


Savings accounts are the most basic type of bank account. You basically put money in, and then the bank pays you with a little interest, and then, if you need funds, you can withdraw cash or you can opt to transfer to another account.

The downside of a savings account, though, is that it is not ideal for everyday spending. That is because there is a limitation when it comes to how often you can make certain types of transfers or withdrawals.


Unlike savings accounts, checking accounts do not usually have withdrawal limits. Thus, making it ideal for those who need to access their money every time.

To use your funds in your checking account, you can do any of the following:

  • Write checks
  • Enter your card number online
  • Set up bill payments online
  • Swipe your debit card
  • Authorize billers to get the fund you owe

Meanwhile, the downside of checking accounts is that usually, they do not pay interest. Although, there are interest-bearing checking accounts, they do not pay more as compared to savings accounts.


Apart from savings accounts, certificates of deposit also earn interest. CDs are another good choice for those who want to put their money in the bank in order to earn interest.

However, unlike savings accounts, CDs are not easily accessible. Banks require that you leave your CD funds untouched for a particular period of time.

Should you intend to get your money ahead of its maturity date, the bank will have you pay a penalty.

With CDs, terms normally vary from six months to five years, and even longer. If you want to earn more, then go for a longer-term.


Money market accounts are like a mix of savings and checking accounts. Usually, money market accounts pay more interest as compared to savings accounts.

A money market account allows you to spend your money easily by either writing checks or by using a debit card.

The catch with money market accounts is that the government limits the number of withdrawals or transfers up to six per statement cycle only.

Money market accounts are ideal for emergency savings or for infrequent expenses.


The bank is normally used generically. If you do not know yet, there are actually different types of banks out there. But of course, big banks are typically the most popular option when in fact, local or regional banks, as well as credit unions, are actually better choices especially if it’s your first account.

Thanks to digital technology and the internet, online banks are booming and are becoming a popular option especially among the young ones.

For your reference, here are the different bank options where you can open an account:


You can usually find large banks as well as global banks advertised aggressively. Needless to say, since they are huge, they usually are present in numerous locations.

Big banks are often household names plus they normally offer a full range of products and services.

Furthermore, big banks have a global reach, a lot of ATMs to choose from, and their customer service is often available 24/7 through phone (or in some cases, through chat).

The downsides of using a big bank though are that since they are huge, you might find them complicated to navigate. Also, there’s a chance of paying more and higher fees as compared to smaller banks and credit unions out there.


Unlike big banks, regional and community banks focus on smaller geographic areas. Normally, they would either serve customers in several states or in just a few towns.

Since they are on a smaller scale, these types of banks is usually more involved in communities. They help individuals, as well as businesses, operate locally. Technically, regional and community banks may play an important role in the local economy.

Now, since they have a more personal touch or personal approach, these banks are more likely to offer free checking accounts and loan approvals.

Unlike big banks though, since these are smaller banks, they typically offer limited options with regards to their products and services.


Credit unions are very much similar to regional and community banks. What makes the difference is that credit unions are not-for-profit organizations that are owned by the members (which are also their customers). Banks are usually investor-owned.

In order to take advantage of the products and services offered by credit unions, you need to be a member first. By the way, being a member means becoming a partial owner of the credit union.

A lot of credit unions have eligibility requirements like belonging into employee groups, associations, or geographic areas.

Being part of a credit union means enjoying superb customer service, lower fees, and of course, access to a shared network of ATMs.


With the advent of digital technology and the internet, the banking industry adapted to it — thus the existence of online banks. Today, there are more online banks coming out, offering customers digital access.

Most online banks operate entirely online without brick-and-mortar branches. This type of bank is ideal for people who are tech-savvy.

What’s nice about online banks is they pay higher interest rates on savings accounts than traditional or brick-and-mortar banks, which we thought is the very reason why this is becoming the new norm in banking.


When finding a bank where to keep your money into, make sure to look for one that offers the following:

  • Good Interest Rates – As much as possible, look for a bank that pays high-interest rates, but offers low rates on loans. Interest rates become more important as dollar amounts get bigger.
  • Minimal Fees – If you can find a bank that does not charge any fee, then that’s a good find. Otherwise, at least choose the one with minimal fees particularly on monthly service charges and low-balance fees. It’s non-sense keeping your money in the bank at the same time paying high fees. It defeats the purpose of saving.
  • Additional/Special Features – All banks offer almost the same types of products, but what makes one different from another? Usually, it’s the features that come with it. So, look into that, and see if it’s a good deal.


While there are certain factors that you should look into a bank, there are also things that you should avoid. This includes the following:

  • Limited Availability of Funds – Banks’ rules are different from one another. While some lets you access your money in just a day or two business days, some hold your deposits and would let you wait a week or so before you get to use your money.
  • Unnecessary Fees – As we have said, when looking for a bank, make sure to look for one with less or no fees at all. Also, make sure the bank does not charge unnecessary fees like low balance fees, inactivity fees, fees for bouncing checks, and many others.
  • Errors and Fraud – As a customer, it is important that you are confident with the bank where you store your hard-earned money into. Thus, make sure to look for a credible bank. A bank that has been there and get through the test of time.


How to get started with banking is pretty much easy, right? It actually is if you know the basic information. It should not cause any hassle at all.

Anyway, now, we go into how to actually open an account — assuming by now you already have a specific bank in mind.

Generally, banks will ask you to provide the following information:

  • Personal Details – This includes your name, date of birth, and Social Security Number or something similar
  • Identification – Banks normally asks one or two identifying documents like a driver’s license, passport, or other government-issued ID.
  • Address – This refers to your physical address.

The above-mentioned information is actually required by the law.

Now, when opening an account, banks do have varying deposit requirements depending on the product that you are availing. Some may require at least $25, while others require at least $100. It’s best to check with the bank first regarding this.


Getting started with banking, as you can see, is actually not that complicated as long as you know the basics.

So, have you been enlightened on how to actually start with your banking experience?

Just keep in mind that to successfully get started with banking, you have to learn and understand the basics first.

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A Guide On What Is Fractional Reserve Banking

Do you know what is fractional reserve banking? It’s basically putting your money on the bank not just for safekeeping, but also allowing the bank to hold a portion of your funds as reserves.

What is Fractional Reserve Banking

Sounds complicated? Well, that is precisely why we are here!

We are going to discuss what fractional reserve banking is all about for you to be able to understand, at the same time, appreciate the whole concept.

As a saver or a bank customer, it is a plus to learn about this process. This way you get to know how you can potentially earn more from your money.

While the term sounds complicated, it’s actually simple and easy to understand. We thought once you have read through everything, you’d have a better appreciation of what fractional reserve banking is all about.


Here’s the thing, when a saver deposits his or her money in the bank, that money is usually available for withdrawal anytime he or she needs it, right? However, what savers do not know is that the bank does not keep all their cash on hand for safekeeping purposes. Instead, a fractional reserve banking system is practiced. This system basically allows the bank to invest the savers’ money, but, still showing the funds sitting in their accounts (otherwise, savers will surely freak out).

It’s like, making use of your money while you do not need it yet — but, in a legal way.

Yes, fractional reserve banking is legal. In fact, according to, all banks in the United States operate under the said system, which means, “the law requires banks to keep a percentage of their deposits as reserves in the form of vault cash or as deposits with the nearest Federal Reserve Bank.”

But for you to fully understand the whole concept of fractional reserve banking, we are going to walk you through some of the most important information regarding this system. As a bank saver, it is your every right to know more about this so you get an idea about what exactly is happening with your money while in the bank.

To be specific, we are going to talk about the following:

  • What is fractional reserve banking?
  • How does fractional reserve banking work?
  • What does expanding money supply means?
  • What do bank runs mean?
  • What are the requirements for fractional reserve banking?
  • How do banks create money?
  • What does fractional reserve multiplier effect mean?
  • What is the importance of fractional reserve banking?
  • What are the disadvantages of fractional reserve banking?


For us to fully understand what fractional reserve banking is all about, we need to first, define what is fractional reserve banking, and second, know its history.

As mentioned earlier, fractional reserve banking refers to a system wherein a fraction of your bank deposits is held in bank reserves. Banks are required to hold just a portion of the funds deposited with them as reserves.

Generally, banks use customer deposits in making new loans, as well as in awarding interest in the deposits made by their clients.

Meanwhile, reserves are held as balances in the bank’s account either at a central bank or as currency in the bank.

In the United States, the Federal Reserve has set a reserve requirement wherein banks are tasked to set aside a minimum portion of funds. For these funds, banks are expected to hold it as cash in vaults or as deposits with Federal Reserve Banks.

Just to give you an idea, for a financial institution that has over $124.2 million in liabilities, the reserve requirement at the moment is 10 percent. This basically means that banks can lend out $90 of every $100 their clients deposit.

As mentioned, apart from understanding and knowing the definition of what fractional reserve banking is, knowing the history is also important — equally important, if we may say.

So, the concept of fractional reserve baking happened during the gold trading era. The idea came to life after it was realized that not all people need their deposits all at the same time.

Back then, when people deposit their gold and silver coins at a goldsmith, they were, in return, handed a promissory note, which was later accepted as a means of exchange. The holders used them in commercial transactions.

The notes were used straight in trade, which eventually made goldsmiths realize that apparently, not all savers withdraw their money at the same time.

With that realization, they began using the deposits to issue loans as well as bills at high interest. That is in addition to the storage fee that is charged to the deposits.

With that, the goldsmiths transitioned from being safe keepers of valuables to interest-paying, as well as interest-earning banks.

Since then, this system, now called fractional reserve banking, was carried over up until this day, and as mentioned, it is in fact a requirement to every bank out there.

If you want to know more about what is fractional reserve banking, here’s a very informative video by Khan Academy. Watch it by clicking the play button below:


Apart from understanding what a fractional reserve banking is, it is also key to understand how the system actually works.  

Now, when putting your money in a bank, the bank is required to keep a fraction of it or a certain percentage of the total deposits on reserve at the bank.

For example, you deposited $100,000 at the bank, and based on the bank’s assets, it has a reserve requirement of 10 percent. Having said that, the bank has to keep $10,000 of your total money on reserve, while the remaining $90,000 can be lent out.

Essentially, the bank has taken $100,000 and turned your money into $190,000 by providing you a $100,000 credit on your deposits, and then lending the additional $90,000 to other customers.

Using the above example, the initial deposited amount, which is $100,000 can eventually grow into $1,000,000 with a 10 percent reserve requirement.

Now, if you are interested in finding out how much money the fractional reserve banking system can theoretically create with your initial deposited amount, you may use below money multiplier equation (which we are going to discuss further later on):

Total Money Created = Initial Deposit x (1 / Reserve Requirement)


If you have been using banks to save your money or to save funds, perhaps in one way or another (especially if you are not that familiar with how banking works), you wondered how does the bank earn from keeping other people’s funds, right?

Basically, the supply of money in a bank grows when it shows money as deposits, at the same time, lending the funds out as loans to other people or clients.

When a saver like you (and me) deposits your money into your bank account, when you do a balance check, the bank will show 100 percent of your account balance.

But in reality, the bank is allowed to lend 90 percent of your deposited funds to other customers or clients, which in return help double (almost) the amount of money in the economy.

If we may just add, by following this kind of system, banks earn, and you as a saver earns as well. How? Well, it’s through interest. The bank won’t be able to grow your money and give you an annual interest if it’s just sitting there and they do nothing about it.

So, the more clients, borrowers they have, it’s actually better. It also helps strengthen the financial stability of a bank.


If you come to think about it, and also basing on the history of fractional reserve banking, you will get to realize that this kind of system works because true enough, people do not need to access all their money all at the same time. It’s unlikely for someone, or for an account holder to withdraw all the money in his or her account at the same time. Now if you do, for instance, the reserve form other customer accounts should be enough to cover what you need.

But what if everyone in the system actually withdraws their money all at the same time? What happens, then?

Well, this circumstance is actually referred to as a “bank run.”

A bank run usually happens when customers feel or fear that the financial institution is in trouble. When customers lose faith and trust with the bank, withdrawal demands transpire.

In this kind of situation, there is a great chance that money will not be enough to satisfy all customer requests. When that happens, the bank becomes insolvent.

While in some cases bank runs are justified, at other times, it happens as a result of panic, which unfortunately causes a bank to fail.

Bank failures are catastrophic. Thus, the Banking Act of 1933 established the Federal Deposit Insurance Corp. Its primary job is to protect deposits in participating banks up to specified limits.

FDIC is like a security blanket. It provides a government guarantee that bank customers will get their money should something unlikely happens to their bank of choice. The same goes for credit unions. However, it’s the National Credit Union Share Insurance Fund that takes care of it.


Reserve requirements refer to central bank regulations regarding the minimum amount of reserves that a bank should hold.

Banking institutions are required to report their transaction accounts, as well as time and savings deposits, vault cash, and other obligations that need a reserve to the Fed on a weekly or quarterly basis.

While there are some banks that are exempted from holding reserves, all banks are paid a rate of interest on reserves, which is called the “interest rate on reserves” (IOR) or the “interest rate on excess reserves” (IOER). This rate serves as an incentive for banks for keeping excess reserves. Excess reserves refer to reserves that are over the level of reserve needed or required.

As mentioned earlier, banks with assets amounting to less than $124.2 million but more than $16.3 million have a 3% reserve requirement. Meanwhile, those with more than $124.2 million in assets have a 10% reserve requirement. As with banks with less than $16.3 million in assets, they are not required to hold reserves.

Please note though that the amount required may change from time to time.  Thus, banks need to always stay up-to-date with regards to their assets, and the requirements of the Fed.


Now, it’s time to know how exactly banks create money. As a customer or a bank client, while it is not a prerequisite to understanding how a bank earns, we thought, it’s good information to know. This will also give you an idea if the bank is generous enough with their customers, or if their rates are reasonable or not.

Moving on, all commercial banks are required to hold only a certain percentage of customer deposits as reserves, while the rest has to be used for awarding loans to borrowers (which, by the way, is one way that banks earn money).

If you have loaned money from banks before, most likely you already have an idea that when a bank gives a loan, it accepts promissory notes in lieu of the credit that is deposited in the borrower’s account in the bank.

It is through depositing to the borrower’s account instead of giving loans in the form of currency is part of the process that banks use in creating money.

Remember we earlier said that the more loans a bank give or approves, the better? Well, that is because it is by giving out loans that the bank creates money. Every issued loan is equivalent to new money, which in return adds up to the increasing money supply.


By now you already know what is fractional reserve banking is all about, right?

But just to reiterate, the fractional reserve is defined as the fraction of deposits that are held in reserves. For instance, if a bank has $400 million in assets, it is required to put $40 million (which is 10 percent of the total asset) on hold in reserve.

When estimating the impact of the reserve requirement on the economy as a whole, analysts refer to an equation called the multiplier equation. The multiplier equation basically provides an estimate for the amount of money created with the fractional reserve system. It is calculated by multiplying the initial deposit by one divided by the reserve requirement. So, for the above example, the calculation is $400 million multiplied by one divided by 10%, or $4 billion.

Again, here’s the multiplier equation for your reference:

  • Total Money Created = Initial Deposit x (1 / Reserve Requirement)

This equation is just a way to look into the possible impact of the fractional reserve system on the money supply of a bank. However, while the equation seems useful for economics professors, generally speaking, it is regarded as an oversimplification by legislators.


We believe fractional reserve banking exists for a purpose. With all the information we shared, it truly is beneficial. Do you agree?

However, we thought one of the essential benefits of fractional reserve banking is the fact that it pools together smaller savings, which eventually are lent out to a variety of markets — to individuals, households, small enterprise, and even big businesses!

Furthermore, through fractional reserve banking, banks are able to earn. Without earnings, a bank cannot sustain itself. If the bank will not loan money to people, there is no chance they’ll earn money. More so, it would be impossible for them to offer interest rates.


Critics will always be there. And yes, even fractional reserve banking has its own critics. They believe that the system is a Ponzi scheme. The process of fractional reserve banking is like robbing the depositor to pay the borrower, which critics find as something that is not sustainable in the long run.

Whether you agree to this perspective or not, the thing is, fractional reserve banking has glaring downsides that are difficult to refute.

One downside is that the money multiplier effect of fractional-reserve banking may result in a growing supply of money. As it is, as the money supply increases, the value of dollar decreases or also known as inflation. Over time, the rapid growth of the money supply may result in a massive decrease in the U.S. dollar’s purchasing power.

Another downside is bank runs, which we have already explained earlier. Bank runs can cause panic among depositors, and essentially, may result in a Depression, or put the bank in big financial trouble.

You see, nothing is really perfect. While fractional reserve banking has its highs, it definitely has its share of lows as well.


Typically, bank depositors see banks as safe-keepers of their money. They go there, open an account, and save. That’s it.

But what most bank customers do not know is that fractional reserve banking does exist. What we do not know is that this system allows banks to hold a fraction of our money and use the remaining to lend to other people.

If the idea of fractional reserve banking is new to you, you may find it quite surprising. But essentially, understanding the whole concept of the system will make you realize that it’s part of the risks of putting your money in the bank, and you got to just really trust that the bank knows how to keep the wheel turning.

So, what are your thoughts on fractional reserve banking?

We hope this enlightens you about what is fractional reserve banking, and essentially, made you appreciate and understand the very purpose of its existence in the banking industry.

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Where Is The Best Place To Get A Loan From?

Finding the best place to get a loan could get a little challenging for some, but the good thing is, there are so many options out there, and it all boils down to finding your perfect match based on your personal needs and preferences.

Best Place to Get a Loan From

According to the data from the Chamber of Commerce, there are 21.1 million outstanding personal loans in the United States. Over 19 million consumers do have an existing unsecured personal loan as compared to the 176 million Americans with credit cards.

You see, these numbers only show that a lot of people in the U.S. do have an existing loan and that the lending industry is booming – no wonder why banks, credit unions, and recently, online lenders continue to prosper. A lot of people need their services.

Anyway, speaking of banks, credit unions, and online lenders, these three are the three major places where you can get a loan. All three of them have their respective highs and lows. But the question is, where is the best place to get a loan?


Well, that is exactly what we are going to tackle today. We are going to share with you different options in each category where you can get the best deals when it comes to borrowing money. Know that at the end of the day, the best place to get a loan will depend from one person to another. As we have mentioned earlier – it will all depend on your personal needs and preferences.


Banks are everywhere. Some of them have been around for decades, and have earned their credibility over the years. Loaning or borrowing from banks usually requires the borrower to apply in person. Needless to say, banks tend to have stricter requirements when it comes to the approval of loan applications.

Let’s face it though, compared to the other two options, one major draw of getting a loan from a bank is that they are present in different places. They have branches in almost every state (depending on the bank, of course).

Although the traditional application does still exist, thanks to the advent of digital technology and the internet, a lot of banks now offer an online application, which makes the process easier and more convenient for both parties.

While the online application is more convenient and time-saving, applying in a branch provides you with amazing benefits like you can ask help from a credit specialist to recommend the best loan the bank offer, and he or she may also walk you through the process. Furthermore, in most cases, you may also find the delivery process faster especially if you already have an existing saving or checking account with the bank.

However, borrowing money from banks does also has its share of drawbacks. One, a lot of major banking institutions require fairly high minimum credit scores to get approved for a loan. Usually, they require a 660 credit score or higher. Having said that, banks are not ideal for people with bad or no credit at all. Two, some major banks like PNC, KeyBank, Wells Fargo, and more offer secured personal loans, which requires borrowers to put up collateral. This means, if the borrower fails to pay off the loaned amount, he or she will have to turn over the collateral to the bank.

Interest rates vary from one bank to another, also, depending on your credit. However, usually, banks do not charge more than 25%, while the lowest interest rate could be as low as 6%.


For your further reference, here are some of the pros and cons of borrowing money from banking institutions:

There are a lot of branches to where you can apply for a loan from. They have stricter loan application requirements.
Some banks offer online loan applications. Most banks, particularly the major ones, require fairly high minimum credit scores.
A credit specialist can recommend the best loan the bank can offer. Some major banks require collateral.
When applying in-person, you can ask your credit officer to walk you through the whole process.  
The delivery process is faster when you have an existing current or savings account with the bank.


For your reference, here are some of the best banks to get a loan from:

  • American Express – More popularly known as Amex, American Express is (obviously) an American multinational company that offers financial services. Headquartered in New York City, the bank offers various products and services, which include credit cards, prepaid cards, corporate programs, as well as savings accounts and CDs, gift cards, and personal and business loans.
  • Citibank – Citibank is another major banking institution that offers a variety of products and services including credit cards, as well as personal and business loans. The company is the consumer division of financial services multinational Citigroup. Founded in 1812, the company is headquartered in New York.
  • U.S. Bank – U.S. Bancorp is an American bank holding that is based in Minneapolis, Minnesota. The company is also incorporated in Delaware. U.S. Bancorp is the parent company of the U.S. Bank National Association, which is one of the largest banks in the United States.
  • Wells Fargo – Wells Fargo & Company is another American multinational financial services company. Headquartered in San Francisco, California, the company does have central offices across the country. Also, it is currently the world’s fourth-largest bank based on market capitalization. In addition, it is the fourth-largest bank in the US based on total assets.
  • KeyBank – KeyBank is the primary subsidiary of the KeyCorp, which is a regional bank that is headquartered in Cleveland, Ohio. As of this writing, KeyBank is listed as one of the largest banks in the country. The bank offers a variety of products and services, and one of them is loans.
  • PNC – PNC Bank is headquartered in Pittsburgh, Pennsylvania. It offers a wide variety of services for all types of customers — from individuals to small businesses up to private corporations and government offices.
  • TD Bank – Tagged as America’s Most Convenient Bank, TD Bank, N.A is both an American national bank and subsidiary of the Canadian multinational Toronto-Dominion Banks (thus the name). The bank offers a wide range of products and services including credit cards and personal loans.
  • Discover Bank – Discover Bank is an FDIC-insured online bank. It offers a number of product selections like a debit card that offers cashback rewards. Unlike the other banks we mentioned, Discover Bank does only has one branch, which is located in Greenwood, Delaware.
  • Fifth Third Bank – Fifth Third Bank offers all personal banking solutions depending on your needs. The Fifth Third Bank is headquartered in Cincinnati, Ohio. It is the primary subsidiary of the Fifth Third Bancorp, which is a bank holding company.

Before we move on, sharing with you an interesting review from Honest Finance wherein he tackles his 3 best personal loan companies. Check the video out by clicking the play button below:


A credit union is probably the best place to get a loan from. A credit union refers to a member-owned financial cooperative. It’s a not-for-profit organization that is controlled by the members and is operated on the principle of people helping people. A credit union provides its members with different financial services including credit at competitive rates.

Compared to banks, credit unions are not as popular. Credit unions usually service a limited are, which is why if you are opting for this option, it is best to do a search of credit unions near you first. You may also give them a personal visit or check their website to see what types of loans they offer.

Meanwhile, like banks, credit unions also allows you to apply for loans in person. Since credit unions are more community-oriented, they are more likely to approve loans even with people who have subpar credit.

What we like about credit unions is that they offer interest rates that are lower compared to banks. They are able to provide a lower interest rate because federal credit unions have an interest rate cap set by a national board. As with state credit unions, they have a cap set by the state government. Moreover, at most, credit unions can only charge up to 18% interest rate.

Just like banks, credit unions have their share of drawbacks as well. This includes eligibility for membership. Most credit unions base their membership requirements on a relationship with an existing member; living, working or going to school in a particular area; or working for a specific company. So, it is just right that if you are looking at borrowing money through this channel, you better check if you are qualified for membership first. 


For your further reference, here are some of the pros and cons of borrowing money from credit unions:

You are a member of the credit union, which makes you a part-owner of the organization. You are required to pay a membership fee (which costs between $5 and $25) to be able to join.
Credit unions have lower fees than many commercial banks out there. Not all credit unions are insured.
They offer better rates (maximum is 18%) as compared to traditional banks. Credit unions have limited branches and ATMs.
Based on reviews, customer service at credit unions are better than commercial banks. They offer fewer services compared to banks.


For your reference, here are some of the best credit unions to get a loan from:

  • Affinity Federal Credit Union – Affinity Federal Credit Union is a credit union that is based in Basking Ridge, New Jersey. The organization offers comprehensive services, which include checking and savings accounts, mortgage, home equity, as well as business solutions, auto loans, credit cards, and many more.
  • Aspire Federal Credit Union – Headquartered in Clark, New Jersey, Aspire Federal Credit Union is a full-service, not-for-profit financial cooperative. It is listed as the 19th credit union in the said state. It is also one of the largest credit unions in the country.
  • Georgia’s Own Credit Union – As the name suggests, Georgia’s Own Credit Union is a credit union that is based in Atlanta, Georgia. Founded in 1940, Georgia’s Own Credit Union is tagged as the third-largest credit union in Georgia has more than 188,000 members as of 2018.
  • Pentagon Federal Credit Union – More popularly known as PedFed, Pentagon Federal Credit Union is one of the country’s federal credit unions. Headquartered in McLean, Virginia, the credit union is federally insured by the National Credit Union Administration. As of this writing, the credit union serves 1.75 members from all over the globe.
  • NASA Federal Credit Union – Headquartered in Upper Marlboro in Maryland, the NASA Federal Credit Union holds nearly $3 billion in assets and is also one of the credit unions that is insured by the National Credit Union Administration. As of this writing, the credit union boasts about 177,000 members from all over the country.


From the name itself, online lenders refer to money lenders that operate entirely online. Online lenders are known to offer better interest rates, as well as smaller service fees compared to traditional banks. For obvious reasons — as they do not have the same overhead cost as banks or credit unions.

Unlike banks and credit unions, online lenders have not been around that long yet. However, the industry is growing. One of its major draws is that you won’t have to wait long to receive a decision and get funded once approved.

Unfortunately, unlike banks and credit unions, online lenders’ interest rates tend to be higher. This depends though on your credit. Some online lenders charge as high as 36% especially if your credit is not that good. Meanwhile, they can get as low as a 6% rate of your credit is great. Unlike banks, online lenders are more willing to lend people with bad or no credit at all.


For your further reference, here are some of the pros and cons of borrowing money from online lenders:

Application made easier and more convenient as everything is done online. Interest tends to be higher compared to banks and credit unions.
Borrowers need not worry about numerous lenders having to access their credit reports. There’s a tendency that lenders may continue contacting you even after the loan is paid off.
Online lending websites let you compare several loans offers all at once. You will have to manage the loan online only.
Suitable for people who do not qualify for a bank or a credit union loan, and needs the money immediately.  


For your reference, here are some of the best online lenders to get a loan from:

  • SoFi – Short for Social Finance, Inc., SoFi is an American online personal finance company that provides different financial services including personal loans, mortgages, as well as student refinancing, investing, and banking. The company was founded in 2011 and is headquartered in San Francisco, California.
  • Marcus by Goldman Sachs – Marcus by Goldman Sachs or simply Marcus was named after one of the founders of Wall Street Bank, Marcus Goldman. It is an online bank that offers competitive rates on both savings accounts as well as a liquid certificate of deposit. What people like about Marcus is that it keeps things simple and at the same time, inexpensive.
  • LendingClub – Headquartered in San Francisco, California, LendingClub is an American peer-to-peer online lending company. It the first online lending company that registers its offerings as securities with the Securities and Exchange Commission. Also, it is the first to offer loan trading on a secondary market.
  • LendingPoint – LendingPoint is an online lending company that is based in Kennesaw, Georgia. It was founded in 2014 to help borrowers improve their personal credit. LendingPoint offers loan options to borrowers with a fair credit score of 600 or higher.
  • FreedomPlus – Based in San Mateo, California, FreedomPlus is an online lender that focuses primarily on underwriting loans to consumers. FreedomPlus is known to provide same-day loan decisions and funding within 48 hours. FreedomPlus is the consumer brand of the Freedom Financial Network, LLC.


Now that we have already provided you a list where is the best place to get a loan from, it is also important that you know what the criteria are when looking for the best place to get a loan. Here are some of them:

APR – This has to be first. Always make sure to compare the annual percentage rate if you want to get the best interest rate. As much as possible, the goal is to get the lowest rate possible.

Credit Score Required – Another important thing criteria to look into is the credit score requirement. Make sure you make the cut.

Fees – You do not want surprises especially when it includes paying fees, right? So, as you do your search, do not forget to look into the fees that come with every transaction.

Approval Process – If you are in a rush to get a loan, you better check the lender’s approval process. This will help you decide whether or not you will get the money in time.


As we said earlier, there are many lending companies/institutions out there. In fact, there are too many it can get a little overwhelming to decide where to transact with. But of course, out of the many, there will always be one that will stand out to be the best place to get a loan from.

Have you found your best place to loan from yet?

Remember that the best place to get a loan depends from person to person. If a lending company works for another that does not necessarily mean it will work for you as well. We all have different circumstances. Thus, the best place to get a loan from is the one that meets your personal needs and preferences.