What do banks and credit unions primarily do?

Banks and credit unions primarily receive deposits and extend loans. This fundamental function is at the heart of what these financial institutions do. When individuals or businesses deposit money into a bank or credit union, those funds become part of the institution's pool of capital. This capital can then be loaned out to borrowers, whether they are individuals seeking consumer loans, businesses looking for operating capital, or homebuyers needing mortgages.

This process of accepting deposits and issuing loans is crucial for the economy as it allows for the circulation of money, helping to fund consumer spending and business investments. It also enables financial institutions to earn interest on the loans they provide, which is a primary source of their revenues.

While the other options might represent services that some banks or credit unions may offer, they are not the primary functions. For instance, providing insurance services, facilitating investments, and offering stock trading services are ancillary to the core business model of banks and credit unions. These institutions primarily focus on the traditional banking functions of receiving deposits and extending loans.