A bank is a financial institution where
you can deposit your money. Banks provide a system for easily
transferring money from one person or business to another. Using banks
and the many services they offer saves us an incredible amount of time,
and ensures that our funds "pass hands" in a legal and structured
manner.
- When you deposit money in a bank, you have
the comfort of knowing your money is in a safe, insured place.
- Most people and businesses, including your
employer, need to have a paper trail to document transactions.
Checks are a perfect way to keep a permanent record of business
activities, even when they are personal.
- Using a personal checking account can save
you time and money. Imagine how much lost time, travel expense,
inconvenience, and potential aggravation you could incur every month
if you had to buy money orders or, worse yet, visit all your
creditors in person. The ability to simply write a check and drop it
in the mail is invaluable.
For example, every time you need cash to pay a bill, you simply
write a check to your creditor. Your creditor deposits your check in
their bank. Your creditor's bank processes your check through the
Banking System and the money is pulled from your checking
account. Result…for very little effort on your part, your creditor
gets paid.
- The same principles apply to savings
accounts. Establishing a savings account keeps your money safe while
allowing easy access to it. Plus, you get the benefit of earning
some interest on your balance and putting your money to work for
you.
In addition to providing a safe place for your
money, banks also loan money to businesses and consumers. A large
portion of a bank's business is lending. How do banks get the money they
loan? The money comes from depositors like you. Banks use these deposits
to make loans. Every fee you pay to your bank enables them to reinvest
in themselves, giving them more money to loan to you, for another fee,
of course.
Banks are in business to make a profit. Their
profit generally comes from the difference in interest paid to
depositors and the interest earned on loans. Making loans helps banks
make money, and offering checking accounts is a way to attract deposits,
which banks turn into profitable loans.
Banks cannot legally loan all of their deposited
money all at once. The Reserve Bank, which is part of the Federal
Reserve System, requires that banks must keep a certain percentage of
their deposits in reserve at all times, assuring you, the customer, can
withdraw your money when you need to.
Other Services Offered by Banks
- Credit Cards
- Personal Loans
- Home and Car Loans
- Mutual Funds
- Business Loans
- Safe Deposit Boxes
- Debit Cards
- Trust Services
- Signature Guarantees
…and many other investment services.
Today you can bank by phone, use Automated
Teller Machines (ATM's) or log onto your bank's Internet site to handle
most of your transactions in a secured environment, conveniently and
safely. There are hundreds of banks, thrifts, and credit unions from
which you can choose. As a result, there is increased competition for
your business. This can be translated into great news for you! You have
a wide array of products and institutions to choose from and can expect
better fees for better services.
( Courtesy:
http://www.careonecredit.com )
