Banking and Credit
Almost everyone engages with banks as part of their routine. A bank is an authorized financial institution that can receive deposits and extend loans. Bank accounts and credit unions provide a wide range of financial services. Most consumers need a credit card or debit card to function in the economy. Banks are also the leading lenders of personal loans and small business loans. This contributes to the broader scope of wealth management and personal finance.
FindLaw's Banking and Credit section discusses consumer protection in banking and financial services. This section contains articles on lowering bank fees, the truth in lending disclosures, and how to file a consumer complaint about a bank. There are also helpful articles on how consumer credit works, managing your credit score and rebuilding credit.
Understanding the regulations and consumer protection agencies governing the banking sector is important. The most important banking regulator is the Federal Reserve. The Federal Reserve is the central banking system of the United States. It sets interest rates, manages the nation's money supply, and regulates financial markets.
There's also the Federal Deposit Insurance Corporation (FDIC). The FDIC is a federal government agency that helps maintain stability within the U.S. banking system. If a bank is FDIC-insured, it means that the money you put in the bank, up to a certain amount, is safe. This "member FDIC" assurance is a vital marker to remember when choosing a bank.
These laws and agencies create a safer and more reliable consumer banking environment.
Types of Banks
Commercial banks are the primary institutions where people conduct everyday banking transactions.
Understanding the distinction between commercial banking and investment banking is important. Commercial banks focus on traditional banking activities. These include accepting bank deposits and providing loans. Investment banking involves activities such as underwriting and trading securities.
Private banks cater to people with high net worth. They offer personalized services like asset management and real estate guidance.
Banking Laws and Regulations
Banking laws cover a range of rules that oversee and protect financial activities in banks. The Overdraft Protection Act of 2021 deals with fees for overdrawing accounts. The Truth in Savings Act ensures clear information about savings account terms. The Fair Credit Reporting Act controls how credit information gets collected and used. The Community Reinvestment Act encourages banks to meet the credit needs of their whole communities. It promotes inclusive financial practices. These laws create a framework that focuses on fairness and responsible banking practices.
Learn more about Bank Records and Financial Privacy Laws.
Banking Accounts and Fees
Many banks offer free accounts. But, most services come with fees like overdraft coverage, ATM usage, and returned checks. These fees can accumulate, including charges for using another bank's ATM or transferring money. Banks may also charge for services like safe deposit boxes, interacting with tellers, and counting coins.
It's essential to choose a bank based on your needs. For example, will the account be a savings account or a checking account? Do you need a business checking account or business banking services? Define the account's purpose — for business or personal use. Consider factors like ATM locations to avoid extra fees. For business-related transactions, explore options such as business credit cards.
Learn how to keep bank fees in check with How Keeping Bank Fees Down Can Reduce the Cost of Banking.
The Importance of Credit Scores
A credit score is a summary of a person's credit history. It analyzes and ranks a person's creditworthiness against the rest of the population. A credit score is important because it will determine the interest rate a person can receive on car, home, or student loans. The better the credit score, the better the interest rate will be. A bad credit score can lead to a bad interest rate or not getting the loan and disqualify a person from certain jobs.
Several factors affect a person's credit score. These factors have different weights in determining a person's credit score. The most heavily weighed factors are payment history, the amount owed on accounts, length of credit history, new credit inquiries, and different types of credit available. Bankruptcy, defaulting on a loan, and accounts sent to debt collectors get viewed most adversely. Also, recent issues get weighed more heavily than ones in the past. Adverse credit history remains on a person's credit report for about seven years.
Hiring an Attorney
If you need help with any banking or credit issues, you should contact a local consumer attorney to discuss your legal options.
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