What Is a Savings and Loan Association?

What Is a Savings and Loan Association?

An S&L is a financial institution that offers savings accounts, checking accounts and home loans. Many S&Ls also provide other banking services, including certificates of deposit (CDs), money market accounts, personal loans, auto loans, retirement accounts and credit cards.

Although large S&Ls exist, many savings and loans are smaller, community-focused institutions. Unlike banks, which are owned by investors, S&Ls are generally owned cooperatively by their depositors and borrowers.

Why Were Savings and Loan Associations Created?

Savings and loan associations were created in the 1800s as a way for average families to pool their money and finance their own homes. In an era when mortgages were not widely available to working families, these associations made the dream of homeownership possible.

At their peak, savings and loans originated two-thirds of the nation's mortgages. A federal charter and federal regulation in the 1930s helped the industry weather the Great Depression and continue to grow. Deregulation in the latter half of the 20th century ultimately led to a savings and loan crisis in the '80s, when many S&Ls closed their doors.

As of the first quarter of 2025, there were 546 savings banks in the U.S., according to the Federal Deposit Insurance Corp. (FDIC). Though many offer a full range of banking services, they also retain a focus on home lending. Many offer low rates on mortgages and home equity loans, and pay competitive rates on savings.

Savings and Loan Associations vs. Banks vs. Credit Unions

On the surface, savings and loans are functionally similar to banks and credit unions. And they are to a degree—these financial institutions offer many of the same products and services. For consumers, however, there are important differences to keep in mind. There are small community banks that serve a local clientele and multibillion-dollar S&Ls and credit unions serving depositors nationwide. The range of products and services at each type of institution also varies from one to the next.

We've highlighted some key differences between savings and loan associations, banks and credit unions below.

Pros and Cons of Savings and Loan Associations

Like any financial institution, savings and loans have pros and cons. Whether you're considering switching all your accounts to a new S&L or are only shopping for a mortgage, think about what you need from your financial institution and how you like to bank. Here are a few upsides and downsides to take into account.

Learn more: How to Shop for a Mortgage

Should You Work With a Savings and Loan Association?

There's no reason you shouldn't work with a savings and loan if you find one you like with the loan or account you need. Here are five good reasons to consider banking at an S&L:

• You found a savings and loan mortgage that fits your needs. One of the best reasons to choose a savings and loan is because you found a mortgage option you like there. Whether you're looking for competitive interest rates or a loan department that's willing to work with you, getting a home loan with the features you want is a good reason to consider an S&L.
• You can get a great rate on a savings account or CD. Savings and loans often have great rates on savings accounts, CDs and money markets.
• You've found a community-focused S&L in your neighborhood. A local financial institution helping people in your area finance homes might be the kind of financial institution you want to support.
• You want personalized service. Some people prefer the anonymity and convenience of digital banking. If that's not for you, however, you may prefer working with a smaller financial institution.
• Working with a customer-owned institution appeals to you. Customer-owned financial institutions may be less focused on turning a profit—and more focused on serving you, their customer.

Learn more: How to Choose a Bank Account

How to Choose a Savings and Loan Association

It pays to comparison-shop when you're choosing a financial institution—or a mortgage. Here are some points to consider when sizing up a new financial institution.

• Mortgage rates, terms and requirements: A typical mortgage represents a 30-year relationship and hundreds of thousands of dollars. Take a close look at interest rates, closing costs and fees, loan requirements and special programs that might help you qualify.
• Savings and checking accounts: Compare rates and features with savings and checking options at your current bank (or other banks) to see how they stack up. Remember: You don't have to switch all your accounts to take out a loan at an S&L.
• Customer experience: Look for personalized service in the branch and on the phone, but also look into ATM access (or fee refunds) when you aren't near a branch. Ask about mobile banking, digital wallets (like Apple Pay) and payment features like Zelle if you use these often.
• Personal loans, auto loans and more: Many S&Ls offer more than just primary mortgages. Check out rates and options on personal loans, auto loans, RV loans, home equity and home construction loans, if they're available.

Alternatives to Savings and Loan Associations

Of course, savings and loans aren't your only choice when you're looking for a home loan. In addition to traditional banks and credit unions, consider these alternatives:

• Mortgage brokers: A mortgage broker works with many lenders to find you a loan that fits your profile and your needs. Although a mortgage broker can't help you with your other banking needs, they can provide a range of home loan options and help you navigate the application process.
• Online-only banks: Because they don't maintain branch locations, online banks can offer competitive rates on mortgages and other types of loans, as well as high-yield savings accounts that may pay many times what a typical savings account does.
• Peer-to-peer (P2P) lending platforms: P2P lenders pool investors' money to fund different types of loans, including mortgages (though smaller personal loans are more typical). Rates and qualification terms vary, so check individual platforms to see what your options are.

The Bottom Line

Whether you want a new place to bank or financing for a new home, a savings and loan association may be worth investigating. Evaluate your options, including traditional banks, online banks and credit unions. And make sure any financial institution you're considering is insured by either the FDIC or the NCUA.

If you're in the market for a new mortgage, you may want to check your FICO^® Score^☉ for free with Experian. Knowing where your credit stands can help you find loans that match your credit score, so you can better compare options from multiple lenders.