Build Wealth Through Banking

Most banks and credit unions are safe places to store your money. The Federal Deposit Insurance Corporation (FDIC) insures bank depositors’ funds up to $250,000 per account. The National Credit Union Administration (NCUA) provides insurance coverage for deposits held in credit unions, up to $250,000 per depositor per credit union. However, not all financial institutions, products, and services are insured. Before putting your money into a bank or credit union, be sure it is insured.

Banks and credit unions can also help you invest your money and earn a return on interest. Here are some banking products that can help you get started with building wealth:

• High-Yield Savings Account – A savings account that offers a higher interest rate compared to traditional savings accounts. High-yield savings accounts are typically insured by the FDIC. Unlike stocks or bonds, high-yield savings accounts are not subject to market fluctuations. Your principal amount is safe, and you earn interest based on the annual percentage yield (APY).
• Certificate of Deposit (CD) – A savings product where you agree to deposit a certain amount of money for a fixed period. During this time, you cannot withdraw the funds without paying a penalty. In return, the institution pays you interest at a higher rate than a regular savings account. CDs are typically insured by the FDIC.
• Money Market Account – A deposit account that combines the features of both savings and checking accounts. Money market accounts pay higher interest rates compared to regular savings accounts, are typically insured by FDIC or NCUA, and are not subject to market fluctuations. They are a convenient option for individuals who need access to their savings while earning a competitive interest rate.
• Credit-Building Cards – Also known as secured credit cards, these financial products are designed for individuals who are looking to establish or improve their credit history. Cardholders make a security deposit up front to establish a credit limit. Responsible use of the card, such as making payments on time and keeping balances low, can help improve the cardholder’s credit score over time.
• Mortgages – A loan designed for purchasing real estate. It is a secured loan, meaning the property being purchased serves as collateral for the loan. Mortgages are long-term with repayment periods ranging from 15 to 30 years. Borrowers are required to make a down payment, usually 20 percent of the purchase price. If borrowers fail to make mortgage payments, they risk defaulting on the loan. This can lead to foreclosure, where the lender takes possession of the property to recover the unpaid debt.

The DFPI licenses state-chartered commercial banks and state-chartered credit unions in California. Use our online directories to verify their credentials. If you are having trouble with your bank or credit union, submit a complaint.