Banking Basics & Digital Banking

A credit union is a member-owned, not-for-profit financial institution, so when you open an account you become a member-owner rather than just a customer. Because there are no outside shareholders, earnings flow back to members through lower loan rates, higher savings yields, and fewer fees.

Short for financial technology, this refers to technology used to improve or automate financial services. It covers a wide range of tools such as digital banking apps, online lenders, payment services, investing platforms, and personal finance software. It’s the reason you can deposit a check with your phone, send money instantly to a friend, or apply for a loan online, though not every fintech company is itself a bank.

A banking model built primarily around online and mobile access rather than in-person branch service. Online-first banks often operate with few or no physical branches, relying on websites, apps, digital customer service, and ATM networks for everyday account needs. Many are fully licensed banks with federally insured deposits, while others partner with established banks to offer services through a digital platform.

Interest calculated only on the original principal amount, not on interest that has already built up. The formula is Simple Interest = Principal × Annual Rate × Time, so a $10,000 loan at 6% for 5 years costs $3,000 in interest. Unlike compound interest, which earns “interest on interest,” simple interest grows in a straight line, making it common in products like auto loans, personal loans, and bonds.

A security measure that requires a second verification step beyond a password, such as a temporary code sent to your phone, biometric verification like a fingerprint or face scan, or approval through a secure app. Even if your login credentials are compromised, this additional step blocks unauthorized entry. Most major banks now offer it as a standard option, though not all users activate it.