Understanding your options in banking services is always important. Where you put your money, how you borrow, and even how you bank will play an essential role in building your wealth over time.

Here, we'll take a closer look at some of the banking services available and how they work.

Keep in mind that although we use the term 'bank' when discussing these types of accounts and account services, many or most of them are also available from credit unions.

Deposit Products

The following are examples of deposit accounts or banking accounts you can deposit money into to either use or save it.

Checking accounts

A checking account allows you to deposit and withdraw money as often as needed. Though some types of checking accounts do, many do not pay interest (there may be fees or deposit requirements on these accounts). Checking accounts provide debit cards you can use for making purchases. You may have limitations on the number of transactions per month, and some have fees while others do not.

Savings accounts

Most savings accounts pay a relatively lower interest rate on your money than you might receive from more investment-focused or time-based deposit accounts. Savings accounts typically are meant for the shorter-term management of funds, such as saving for a new car, vacation, or downpayment on a home. While they are available to you whenever you need them, they are usually funds you use to save for a specific purpose.

Certificate of deposit

A certificate of deposit, or CD, is a savings vehicle you put money into for a set period. The money is less accessible to you during that time, but if you keep it in the account for that duration, it pays you a set amount of interest. This option may earn more interest than your traditional savings account.

Money market accounts

A money market account is another type of savings account that may have check-writing privileges and a debit card. It pays an interest rate typically higher than most other checking accounts. They often come with restrictions that make them less flexible than the average checking account, such as a higher balance requirement.

Credit Products

Credit products are like loans in that you borrow money and pay a fee, in the form of interest, for doing so. There are various forms, including the following:

Credit cards

A credit card allows you to make purchases on credit, up to a limit – the most you can borrow at one time. The interest rates you incur are based on your creditworthiness. However, borrowers can pay off their balance in full before the due date to eliminate interest in some cases. Users can borrow and pay back on the account over time, and there is often a minimum payment required each month.

Lines of credit

A line of credit works in much the same way as a credit card, with the difference being that these tend to have more substantial credit limits. Some are secured loans, which means that a loan uses an asset as collateral. Collateral minimizes the risk to the lender. Others are personal loans without any security but may be in place for many years. There is often a minimum payment required each month.

Installment loans

An installment loan is a loan in which you borrow a specific amount of money at one time, and you then repay the loan in payments each month. Unlike other types of credit, these loans typically require a fixed payment that you pay each month over a defined period.

Mortgages

A mortgage is a type of installment loan used to purchase real estate. Mortgage loans may have fixed or adjustable interest rates. Mortgages are secured loans, which means the home is the collateral for the loan. Loan terms are typically 15 to 30 years and have a lower interest rate than other installment loans. There are several forms of these loans, such as FHA loans, VA loans, and conventional loans.

Other Products

Several other types of banking and financial products exist. Here are some examples of how these services may work.

Check cashing

Some banks offer check cashing services. That means you can take a check to the bank, and they will cash it for you, providing you with cash on the spot. Some banks require a person trying to cash a check to have an account with the bank or credit union. Those offering check cashing services typically do not have this requirement. Fees may be a part of this service and may depend on the check amount.

Money orders

A money order is a safe way to give someone else money without handing them cash. They work very simply and much like a check, though you do not have to have an account to use them. Instead, a money order allows you to provide a specific amount of money to the bank. The bank then creates the money order in the amount you desire made out to the person or company you wish to pay. Only that organization or person can cash the money order. If you do not have an account, there is often a flat fee or a percentage-based fee for this type of service.

Prepaid cards

Today's digital society makes it hard to make financial purchases without having a card to use. Yet, those who may not qualify for a credit card or a bank account may struggle to do so. A prepaid card can help with that. The card's issuer allows you to use the card, instead of cash, up to the amount you have deposited on the card. For example, you can give your bank $500 and obtain a prepaid card with a $500 balance. You can make payments with the card, up to $500.

Debit card

A debit card is a card that uses the funds in your linked bank account to make purchases. Banks issue these to account holders. You can use them to make purchases based on the amount of money in your checking account. The money is immediately removed from your checking account to pay the merchant. Keep in mind that some banks charge a fee for these cards or may have restrictions on how many times you can use them. Debit cards are not credit – you can only use them for the amount available in your account.

Cashier’s checks

A cashier's check is a check drawn from the bank's funds rather than your own. The person obtaining the cashier's check pays the bank or credit union upfront for the check's total amount. The bank creates the check, designates who can cash it, and a bank representative signs it. No one else can cash the check except the designated party. These checks tend to be processed faster than a personal check and are best for when the funds need to be immediately available.

ATMs and ATM cards

There are times when cash is necessary rather than a card. You can find ATMs at your bank, credit union, or other remote locations. They allow you to withdraw funds from your checking or saving accounts. An ATM card is issued to an account holder to do this. Often, an ATM card and debit card are the same and used for both needs. ATMs may charge fees if you do not withdraw funds from your own bank's ATM. Some ATMs also take deposits of funds to be put into your account.

Online or mobile banking

Today, many consumers want a convenient way to manage their money. Online banking has grown to meet that need. It allows consumers to log into an account online, over the Internet, to manage their accounts. Many also offer bill pay services, which enable you to make payments as needed.

Mobile banking is similar. You can access your account through a mobile app, which may allow you to make, track and manage payments and transfer funds between accounts.

Person-to-Person (P2P) payments

P2P payments are a way of paying someone else directly. Instead of taking money out of your bank account to pay someone, you can use this method to pay someone electronically. A newer service compared to others, many banks offer this tool as consumers look for a way to transfer money to others for various needs. You can use them to send money as a gift, split a bill at a restaurant, or other money transfer transactions.

Remittance transfers

More commonly known as an international wire, a remittance transfer allows you to transfer money electronically to others internationally. That may allow you to send money from your account, through your bank, t to someone else's bank account in another country. There may be a fee for this transfer service.

There are many ways to manage your money, and your bank or credit union is a vital part of it. Understanding all of the services your bank or credit union offers is critical to sound money management.