Unless you’re keeping cash tucked under your mattress, it’s very likely you’re using a bank, brokerage or credit union — or a combination of the three — to help you manage your finances.

Knowing the differences between the places where you leave your money can help you better manage your assets.

Read on to get a better handle on some of the financial jargon.


A retail bank is where you most often do your everyday banking, like withdrawing cash or depositing a check. Retail banks offer a range of products and services, such as savings accounts, checking accounts, personal loans, debit cards, credit cards or home mortgages, that are geared toward the individual consumer (it's also called consumer banking).

The local bank branch you visit to withdraw cash from the ATM is a retail bank. However, not all retail banks are brick-and-mortar; many are online-only.


A retail bank is typically part of a larger commercial bank, which provides the aforementioned services (loans, credit cards, mortgages, checking and savings accounts, etc.) to both individuals and businesses. “For consumers’ purposes, the retail bank is the entity that they’re dealing with,” says Greg McBride, chief financial analyst at Bankrate.com. But the commercial bank will also have a corporate banking side that deals with small companies.

Commercial banks generally make their money by taking the deposits they receive from their customers and using those assets to lend money with interest to other individuals or businesses.

Many commercial banks also have an investment banking arm that specializes in products and services for large investors and corporate customers, such as advising on mergers and acquisitions, and trading securities.


Credit unions provide a lot of the same products and services that retail banks do; the major difference is that they are not-for-profit, cooperative financial institutions whose purpose is to benefit their members. They typically serve a particular group of people with something in common, also known as the field of membership. This could include a shared employer, geographic location, religious organization or labor union, for example.

Consumers might find that credit unions offer financial products or services with more favorable terms than those offered by large commercial banks. That’s because profits may be returned to members in the form of better account terms, lower interest rates, fewer fees or additional services, says McBride. And while both traditional banks and credit unions have a board of directors, “what makes [the board] unique at a credit union is that it’s typically run by volunteers,” McBride adds.


A brokerage firm, or simply a brokerage, is a financial institution that facilitates transactions involving the trade of securities (the Wall Street term for financial instruments like a stock or bond that you can buy or sell). At most brokerages, stockbrokers serve investors who trade public stocks or bonds, or want to invest in different types of funds. So if you wanted to buy a stock in company X or put some money into mutual fund Y, you would need a brokerage to help you do that.

A full-service brokerage provides a variety of services other than just trading. These might include market analysis and research, tax advice or retirement and estate planning. Since full-service brokerages provide a large number of services, they often charge investors higher fees or commissions than discount brokerages, which only execute trades without offering additional financial services.


A taxable brokerage account is an investing account you open through a brokerage firm that you fund with post-tax dollars. This money can then be invested in stocks, bonds, mutual funds, exchange-traded funds, cash investments and other types of assets. If you earned money on your investment at the time that you sold it, you may have to pay capital gains tax on those earnings. If you lost money, then you may be able to get a tax deduction by reporting a capital loss. You should always talk to your accountant or tax preparer about how these taxes could apply to you.


By contrast, a tax-advantaged account helps reduce your tax burden either by 1) deferring the taxes on your contributions and investment growth until you make withdrawals in the future, or 2) by allowing for tax-free growth on your post-tax contributions, so you likely won’t end up owing taxes when you make withdrawals down the line. Tax-advantaged accounts are commonly used to save for retirement and can include Roth and Traditional IRAs and 401(k)s.

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