What is banking


Banking

Banking includes a wide variety of financial institutions that store the money of individuals, businesses and other entities. Banks provide financial services that help people save, manage and invest their money.


What Is Banking?

Banking is the business of protecting money for others. Banks lend this money, generating interest that creates profits for the bank and its customers.


A bank is a financial institution licensed to accept deposits and make loans. But they may also perform other financial services.


The term “bank” can refer to many different types of financial institutions — including bank and trust companies, savings and loan associations, credit unions or any other type of institution that accepts deposits.


Why Use a Bank in the First Place?

Security

Banks protect your cash from theft and natural disasters like fires or floods. Your insurance may not cover money lost in your home, car or on your person. But banks don’t typically carry the same risk.

Insurance

Banking security is more than just vaults and guards. Most of your assets are federally insured up to $250,000 by the federal government if the institution fails. The FDIC (Federal Deposit Insurance Corporation) insures assets in banks and the NCUA (National Credit Union Administration) insures assets in credit unions. Federal laws also require institutions to maintain minimum levels to help them remain solvent.

Convenience

Banks allow you to access your money when you need it. They can also provide “one-stop shopping” for financial needs from investments to home and auto loans, along with other financial services. Convenience, along with interest rates and low fees, are major selling points for banks.

Services to Grow Your Wealth

Banks offer many services that can help you grow wealth. These include high-yield checking or savings accounts,

Checking Accounts


Checking accounts are deposits used by consumers and businesses to pay their bills and make cash withdrawals. They pay little or no interest and typically come with monthly fees, usage fees, or both.


Today's consumers generally have their paychecks and any other regular payments automatically deposited in one of these accounts.


Savings Accounts


Savings accounts pay interest to the depositor. Depending on how long account holders hope to keep their money in the bank, they can open a regular savings account that pays a little interest or a certificate of deposit (CD) that pays a little more interest. The CDs can earn interest for as little as a few months or as long as five years or more.


It is important to note that the money in checking accounts, savings accounts, and CDs is insured up to a maximum of $250,000 by the federal government through the Federal Deposit Insurance Corp


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