Savings and loan (thrift)

Also called Savings association, Savings bank

A bank-like institution that historically focused on taking savings deposits and making home mortgage loans.

What it means

Savings and loan associations, also called thrifts, were created to gather local savings and lend them out as home mortgages. Federal rules still expect thrifts to keep a large share of their lending in housing and consumer loans, though today most offer checking, savings, CDs and other loans much like a commercial bank.

Some thrifts are mutual, meaning depositors own them, while others are stock companies owned by shareholders. Deposits are FDIC-insured on the same terms as at banks: $250,000 per depositor, per insured institution, per ownership category. Rates and fees vary widely, and for most customers the experience is similar to using a community bank.

Example

For example, a homebuyer might get a 30-year mortgage from a local thrift that keeps the loan on its own books rather than selling it, which can mean dealing with the same lender for the life of the loan.

How it’s used

Shopping for a mortgage with a local lender
Opening savings accounts or CDs at a community institution
Banking where depositors share in ownership (mutual thrifts)

Strengths and weaknesses

Strengths

Deep experience with home lending
Community focus and sometimes competitive deposit rates
FDIC-insured deposits

Weaknesses

Fewer thrifts remain than in the past, so options may be limited
Smaller branch and ATM networks
Product lineup may be narrower than at large banks

Educational information only, not financial, tax or legal advice. Rules, limits and rates change; check the IRS, your lender or plan, or a qualified professional before acting.