Banks collect money from people, lend it to organizations that invest it, and then reward contributors with interest payments that were earned from the investments. Check out more banking basics here.
Credit unions are not-for-profit financial cooperatives whose earnings are paid back to members in the form of higher savings rates and lower loan rates. Banks, on the other hand, are for-profit corporations that pay declared earnings to stockholders only. Learn more about banks vs. credit unions here.
Savings accounts enable you to deposit money at a bank and receive interest payments for leaving it there. A more liquid, or cash-accessible, way to store your money is in a checking account. Through your checkbook or bank card, you can easily spend or deposit funds into your checking account. Both checking and savings accounts are federally insured, a.k.a. the government won't let it disappear, but that safety comes at a price of low interest rates. Learn more about how interest rates work here.
Credit cards and debit cards enable you to purchase things quickly but in different ways. Debit cards let you spend money that you have deposited in your checking account. Credit cards let you borrow money from the company that issued the card. You can borrow up to a certain limit that varies by card. Once a month, the credit card company issues you a statement listing everything you have purchased with their money that month so that you can repay them. If you pay in full, you pay only the amount that you spent. If you cannot pay the full amount, you will be charged interest payments as if you took out a little loan. Read more about credit cards and decide which payment option is better for you.
You can borrow money for large purchases by applying for and receiving a loan. Upon approval of your loan application, you will receive the full amount of money that you requested to borrow. Then you pay back the money in installments, or small payments over time plus interest for the privilege of the loan. Learn about some common loan types here.
Your credit score (or FICO) is a number that shows how likely you are to repay borrowed money, and therefore, how worthy you are of receiving a credit card or loan. Scores range from 300 to 850. Three main companies provide these scores: Equifax, Experian, and TransUnion. Scores are communicated through credit reports, which you can request to see a breakdown of why you got the score you have. Learn more about credit scores and their associated credit reports here.
In addition to this website, Radford University offers several other ways to learn more about financial wellness. See the Financial Aid website if you want to explore the resources on your own, or enroll in a personal finance course (FINC 251) for an in-depth introduction.
Local Banking Options