Banks are financial institutions acting as intermediaries for everyday financial transactions including the dispersion of paychecks to employees and payments to businesses for goods and services and governments for taxes. Additionally, banks provide loans to customers while charging interest. Due to the importance of banks in the economy, governments place regulations on these financial institutions.
Some people do not trust banks and prefer to keep their money at home. After all, many banks are private businesses, which can cause intimidation to consumers. However, banks are important because the financial firm is a secure place to store one’s money. Not to mention, the Federal Deposit Insurance Corporation in the United States insures against the failure of a bank by guaranteeing that customers receive up to $100,000 for every checking account and savings account under their name. In the Internet age, a bank robbery or fire does not affect a person’s account due to ATM and online monitoring of funds. On the other hand, money in a burnt home no longer exists. Hence, a bank is the safest place to keep one’s money.
What Types of Bank Accounts Are Available?
Most people have checking accounts as the main vehicle for spending. Originally, these accounts provided customers a book of paper sheets or checks to use as money. Today, due to the Internet, checking accounts are accessible through electronic transfer and debit or ATM cards for spending activities. Some banks pay interest to customers for this type of account; however, the minimum balance is higher than that of non-interest bearing accounts.
The worst aspect of keeping money at home is not receiving interest income. However, customers receive interest income from banks as a form of gratitude for keeping one’s money under their care. In some countries including the United States, laws limit customers from withdrawing too much from their savings account as a deterrent for increased spending. Some banks require a minimum balance for savings accounts. Earned interest in savings is higher than that of checking.
Need to maintain business transactions and save? Banks offer business bank accounts to any business including sole proprietors, partnerships and corporations. Accounts include checking and savings types.
Banks offer joint bank accounts for married couples to maintain shared, household spending. Additionally, joint accounts are important for parents to keep track of their minor children’s money. These accounts are available to business partners and close relatives too.