Chapter 8 Financial Institutions and Services 181
may also pay slightly higher interest rates on savings. Today, larger credit
unions are run by professional management. They offer most of the ser-
vices banks and other fi nancial institutions provide.
Credit unions may be either federally or state chartered. The National
Credit Union Administration (NCUA) grants federal charters and super-
vises credit unions across the country. NCUA also insures deposits in all
federally chartered and many state chartered credit unions.
Mutual Savings Banks
A mutual savings bank is owned by its depositors. After deducting
operating costs and cash for reserves, earnings are divided among deposi-
tors. These earnings are dispersed in the form of dividends. Traditionally,
mutual savings banks received and paid dividends on deposits and made
home mortgage and improvement loans. Now, they, too, offer a wider vari-
ety of fi nancial services.
Only state governments charter mutual savings banks. They exist in
only 17 states, mostly in the northeast.
Choosing a Financial Institution
When choosing a fi nancial institution, consumers generally look for
checking, savings, investment, and credit services. Before opening an
account, it is wise to do some research. Web sites of banks and other insti-
tutions have information about their services and fees. To assess whether
an institution has a helpful staff, you may want to visit it in person.
Compare local banks, credit unions, savings and loan associations, and
other providers of fi nancial services. Find the place that best serves your cur-
rent and ongoing fi nancial needs. Once you choose a fi nancial institution,
it pays to establish a good working relationship. Make your fi nancial needs
known and learn how the institution can help you manage your money.
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Check-cashing
services are not
fi nancial institutions,
but businesses that
provide certain fi nancial
services for a fee. People who
turn to check-cashing services generally have no
bank account and need cash immediately. Financial
experts advise consumers to avoid check-cashing
services for two reasons. They are not federally
insured and they charge high fees, which quickly
surpass bank fees. By contrast, many banks offer
free checking and low-cost services if the account
balance stays above a certain level. Many check-
cashing services also make payday loans, which
are even more costly. For most consumer needs,
bank accounts are less costly and more reliable
than check-cashing services.
Check- Check-
Cashing Cashing
Services Services