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Saturday, July 27, 2013

Banking services: More than just checking and loans

Long-term savings instruments are also offered by financial institutions
Financial institutions offer retirement planning advice
 By Kendall Moore

If you asked your parents what a bank is good for, they probably told you that it was a place to save some money, cash checks, write checks and apply for loans. All of these things are correct, but that is a very narrow view of the things that a financial institution can do for its customers. The best financial institutions have a variety of services that they provide and can help their customers navigate through the many different stages of life.

Retirement planning

Since 2008 Americans have seen the value of their retirement plans plummet, and even though there has been some recovery, there is still a lot of uncertainty about what the future might bring. It is important to save for retirement, as many estimates suggest that people will need well over a million dollars in assets to live comfortably after retirement because of the increased cost of healthcare and longer life spans. A financial institution can offer you retirement planning advice, such as how to open an IRA and how to roll over a 401(k) if you change jobs or lose your job. This protects the money that you already have set aside for retirement, because IRAs are usually not tied to the volatility of the stock market, and it gives you the best chance to have a good life when you finally get ready to stop working.

Long-term savings

A savings account is a good way to teach a child about how to save money, but the interest on those accounts is small compared to some other investment options. Sometimes you will want to invest some money for the long-term, but you want to make sure that money is safe, and available in a dire emergency. A financial institution has just what you need to invest in long-term savings. Certificates of Deposit, or CDs, are variable length savings programs that will let you put money aside and gain a higher interest rate than it would in a savings account. After the CD matures you will get the money back that you invested, plus the interest. At that point you can renew the CD if you do not need the money right away. This is great way to build a down payment for a home or other large purchase.

Financial services

Finally, there are advanced financial services that a financial institution can provide that you might have gone to other places to have done. They can wire money instantly from one place to another, putting money directly into the recipient’s account, instead of forcing them to go to a Western Union location to pick up the money. The financial institution can also issue traveler’s checks when you travel, and they can print cashier’s checks when you need to make a purchase with certified funds. 

Too often these services are overlooked, and if you are going to another vendor to get any of these financial services, you are paying far more than your bank would charge to do the exact same thing. By using your financial institution for advanced financial services you will get the most from your banking experience. The financial institution exists to serve its customers, and it is wise to see what the institution can do for you before you start seeking help from the outside.

About the author: I am Kendall Moore and I am a financial services advisor for EACU. All too often I hear people complain that they cannot find a company that can provide the banking or financial services that they want, and they are shocked to learn that EACU has all of these advanced services. For more information about what EACU can offer, visit http://www.eacu.org.

* Image license: Micromoth; RGBStock.com royalty free