The Many Faces of Financial Institution

A finance company is an institution that conducts financial businesses such as loans, investments, and deposits. We deal with them in our everyday lives —from depositing money to getting loans and exchanging currencies. There are different finance institutions where you can lean on, but make sure first that you know their roles and financial system.

First, the commercial bank is a financial institution that accepts deposits and gives security and convenience to their clients. One of their original purposes is to offer a safe keeping of their client’s money. With the help of banks, you are rest assured that your money is secured, especially if it’s a large amount. If you decide to keep the money on hand, there’s a bigger possibility of spending it unknowingly or may be lost due to theft and accidents. Also instead of bringing with you the bundled money, banks offer transactions that can be done through checks and cards, which is more comfortable to the client. Commercial banks also give out loans to individuals and business, just like other finance institutions. There is also an investment bank that differs in role with the commercial bank.

Another type of finance institution is the insurance company. The company collects money from group of people who wants to assure themselves or their family from a particular loss, accidents, disability or even death. The insurance companies help individuals and companies manage possible risks and at the same time helps preserve wealth. With this system, insurance companies can profit from insuring a large number of people, and pay when claims arise. They can operate profitably since not all individuals may suffer losses at the same time.

Next type are the investment companies. This company is a trust or a corporation wherein individuals can invest. Instead of buying a combination of individual stocks for a portfolio, an investor can buy securities through a package bond such as a mutual fund.

Another one is the savings and loans associations, which resemble banks in many ways. These associations offered a lower rate on loans than the commercial banks, and a higher interest rate on deposit.

The next one are the credit unions. This type is another alternative to commercial bank. They are almost organized as cooperatives —  they do not seek profit. They typically charge higher rates on deposits, and offer lower rates on loans.

Finally, there are also non-bank financial companies which provide some of the services same as the banks offer. There are still other finance institutions wherein you can ask for help for instant finance for business or personal needs.

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