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What is a Thrift Bank?

Malcolm Tatum
Updated May 16, 2024
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Thrift banks are financial institutions that focus on basic banking services for their clients, with an emphasis on individuals and small businesses. This core of services is built around the offering of home mortgages along with savings accounts that carry a competitive rate of interest. Today, it is common for this type of bank to also offer checking accounts, car loans, and other personal finance support services.

Unlike retail or commercial banks, a thrift bank is normally thought of as a community development financial institution that is concerned with providing the best financial services possible to individuals, as well as small businesses that operate in the area. It is highly unusual for this type of bank to actively seek accounts with large companies or other businesses that operate on a national or international scale. A thrift bank is likely to be owned and operated by people that live in the community, and who are deeply invested in the general well being of that community.

A thrift bank may function with one central location, or operate a few branches within a relatively small geographical area. Just as the larger banks, a thrift one that operates multiple branches utilizes technology that effectively allows each branch to access a central repository of accounts. This allows bank customers to conduct business at any of the branches with equal ease, including depositing funds into a savings or checking account, or making payments on a mortgage or other type of loan.

In terms of service offerings, a thrift bank is capable of meeting all the usual needs of the individual customer. The savings accounts often come with an interest rate that is competitive with the rates offered by the larger financial institutions. Home mortgages are also likely to carry rates and other terms that compare to mortgage options at other banks, mortgage companies, and savings and loan associations operating in the area. When it comes to checking accounts, a thrift bank normally offers at least a no-frills checking account, and may offer more than one checking account option, such as accounts with special rates for depositors over the age of fifty.

As with all types of banking institutions, deposits in a thrift bank are protected through government programs. This allows depositors to feel secure that their savings and checking account balances are insured, at least up to a certain amount.

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Malcolm Tatum
By Malcolm Tatum , Writer
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing to become a full-time freelance writer. He has contributed articles to a variety of print and online publications, including SmartCapitalMind, and his work has also been featured in poetry collections, devotional anthologies, and newspapers. When not writing, Malcolm enjoys collecting vinyl records, following minor league baseball, and cycling.

Discussion Comments

By anon983530 — On Dec 31, 2014

What is the definition of private development banks?

By irontoenail — On Jul 09, 2012

@Iluviaporos - There are benefits in both kinds of banks, really. A larger bank is going to be more versatile, and a smaller bank will probably be able to give you better interest.

Just because a larger bank is big doesn't keep it from collapsing though. Plenty of large banks have collapsed and taken everyone's money with them. Just as plenty of smaller savings thrift banks have stayed afloat because they aren't trying to put a thumb in every pie.

Personally, I do what my father always advised and not put all my eggs into one basket. I keep my day to day expenses in one bank, some of my savings in another, some bonds and things with yet another and once I get to a certain point in savings I will diversify again. It makes sense because with the internet it's not complicated to get things done and I can take advantage of any offers any of them are giving as well.

By lluviaporos — On Jul 09, 2012

@KoiwiGal - Most of what you said about a local thrift bank can apply to local branches of a multi-national bank. Individual branches are often given the ability to choose local events and things to sponsor and they are run by people who live in the local community as well. All banks are run by local people when you come down to it, none of them are run by machines or by people who are brought in specially from out of town.

I prefer to use a bigger bank because they are less likely to fold. A small bank is a liability as far as I can see. My parents had money in a small, local bank and lost most of it when it folded without warning. They had insurance too, but it often doesn't mean you get all your money back.

You're better off putting faith in savings banks that have a proven track record and the size to back up any of their claims.

By KoiwiGal — On Jul 08, 2012

I think more people should use thrift banks. I get the impression people think that using big banks is somehow easier, or just the better choice in general, but thrift banks often have better interest rates than other banks and those numbers can add up over a few years.

Plus, they will remember your name and might even be your neighbors, so you can be sure you're going to get good service. A local bank is just a better choice for almost everything. They put back into the local community as well. My local thrift bank sponsors half the sports events in my town and has its name on a lot of the public buildings.

It's able to do that because the town supports it and because the people who run the bank are part of the town, they support the town in turn.

Malcolm Tatum

Malcolm Tatum


Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing...
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