Meaning
Retail banks offer a wide range of banking products and services to meet the financial needs of individual customers. These products help customers save money, make payments, withdraw cash, borrow funds, and invest their savings.
Retail Banking Products
The major products and services offered by retail banks include the following:
- Transactional Accounts are used for regular banking transactions such as deposits, withdrawals, fund transfers, and bill payments.
- Checking Accounts (American English) and Current Accounts (British English) are transaction accounts that allow customers to make frequent deposits and withdrawals.
- Savings Accounts help customers save money while earning interest on their deposits.
- Debit Cards allow customers to make purchases and withdraw cash directly from their bank account.
- ATM Cards enable customers to withdraw cash and perform basic banking transactions through Automated Teller Machines (ATMs).
- Credit Cards allow customers to purchase goods and services on credit, subject to the credit limit approved by the bank.
- Traveller’s Cheques are prepaid financial instruments used mainly by travellers as a secure alternative to carrying cash.
- Mortgages (Home Loans) are loans provided for purchasing, constructing, or renovating residential property.
- Home Equity Loans are loans granted against the value (equity) of an existing house owned by the customer.
- Personal Loans are unsecured loans provided to individuals for personal requirements such as education, marriage, medical expenses, or travel.
- Certificates of Deposit (CDs) / Term Deposits are fixed deposits placed with the bank for a specified period at a fixed rate of interest.
Special Retail Banking Accounts (Available in Some Countries such as the U.S.)
Some countries, especially the United States, provide additional specialised retail banking accounts.
| Account | Purpose |
|---|---|
| Sweep Account | Automatically transfers excess funds from one account to another to maximize interest earnings or maintain required balances. |
| Money Market Account | A deposit account that generally offers higher interest rates while allowing limited withdrawals. |
| Individual Retirement Account (IRA) | A special retirement savings account that provides tax-related benefits under U.S. laws. |
Key Points
- Retail banking products are designed for individual customers.
- Major products include Savings Accounts, Current/Checking Accounts, Debit Cards, Credit Cards, Personal Loans, Home Loans, and Term Deposits.
- Checking Account is the American term for a Current Account.
- Certificates of Deposit (CDs) are known as Term Deposits or Fixed Deposits.
- Sweep Accounts, Money Market Accounts, and IRAs are specialised retail banking products available in some countries, such as the U.S.
Exam Points
- Checking Account = Current Account (British English)
- Certificates of Deposit (CDs) = Term Deposits
- Major retail banking products: Savings Account, Current/Checking Account, Debit Card, ATM Card, Credit Card, Mortgage, Personal Loan, Term Deposit
- U.S.-specific specialised accounts: Sweep Account, Money Market Account, Individual Retirement Account (IRA)