A Look at Mutual Savings Banks

Mutual savings banks are a type of bank that is designed to provide benefits to the account holders in the bank. This type of bank is set up differently from a traditional bank. Here are the basics of the mutual savings bank and what it provides to account holders.

Mutual Savings Banks

A mutual savings bank is a type bank that is owned by the account holders in the bank. If you open an account with a mutual savings bank, you are going to be considered a partial owner in the bank. With a traditional bank, shareholders are going to be the owners of the company. This means that a regular bank is going to be more concerned with pleasing the shareholders because they are the actual owners of the business. A mutual savings bank is concerned about pleasing the account holders, who are the owners; thus, they value customer service.

Basic Concepts

The basic idea behind this type of bank is that they encourage account holders to save as much money as possible with them. They encourage account holders to make deposits and allow the bank to pay them interest on the deposits. The bank will use the money to make loans, just as a traditional bank would. The mutual savings bank will invest the money in mortgages, stocks, bonds and other types of investments. The profit that is made from the bank investments is going to be split among the account holders in the form of interest. This creates a sort of profit sharing arrangement with the customers of the bank.

As an account holder in a mutual savings bank, you will notice that the customer service is a lot different. The employees of the bank are aware that you are technically their employer, and they want to make you happy in every transaction.

Cautious

Mutual savings banks have a history of being extremely cautious financially. This means that they do not invest in some of the investments that other banks are willing to put money into. They are very skeptical about certain investments, and this leads them to invest in things that are considered extremely safe. Because of this type of investment policy, mutual savings banks were practically the only banks that were able to stay afloat during the Great Depression. While other banks went out of business, mutual savings banks were still there to do business with their customers because of their extreme conservatism.

Safety

This type of bank also prides itself on being a safe place for individuals to deposit their money. This also integrates with the conservative investment practices of the mutual savings bank. Mutual savings banks know that they are not going to invest money in frivolous endeavors and risk not being able to pay back the depositors. Customers of mutual savings banks know that their money is safe, as they are investing in a bank that was chartered by a state or federal government.


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