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Banking Resources
The essential function of a bank is to provide services related to the storing of value and the extending of credit.
The evolution of banking dates back to the earliest writing, and continues to the present day.
Currently the term bank is generally understood to be an institution that holds a banking license.
Banking licenses are granted by financial supervision authorities and provide rights to conduct the most fundamental banking services such as accepting deposits and making loans.
The word bank is derived from the Italian “banca”, which is derived from a German word which means “bench”.
The terms bankrupt and “broke” are similarly derived from “banca rotta” which refers to an out of business bank, having its bench physically broken.
Money lenders in
Northern Italy originally did business in open areas, or big open rooms, with each lender working from his own bench or table.
Typically, a bank generates profits from transaction fees on financial services and on the interest it charges for lending.
Checking Accounts – The most common type of a demand deposit offered by any banking institution.
A checking account lets you safely store your money in the bank and allows you to spend it anytime you want by writing a check.
There are many benefits to having a checking account.
The first is safety – checks are safer to carry around and send through the mail than cash.
Unlike cash, a blank check is worth nothing without the proper signature.
A second benefit of a checking account is proof of payment.
A cancelled check is as good as a receipt.
You can make a withdrawal from this type of account at any time without advance notice or penalty.
The account may or may not earn interest, depending on the policy of the financial institution.
Saving Accounts – A savings account is an agreement between a bank and a depositor whereby money is deposited in the bank in exchange for interest and safekeeping.
A liquid account that generally offers low or no minimum balance requirements, often carries a monthly service charge, and generally pays a low rate of interest.
The account usually has no restrictions on the number of transactions.
It’s wisest to open accounts at FDIC-insured institutions.
Savings accounts may be opened at banks – on and off the Web, credit unions and other financial institutions.
The amount of interest your money earns in a savings account often depends on the type of financial institution you have selected and the type of account.
Money Market Accounts – An interest-earning savings account offered by a FDIC-insured financial institution with limited transaction privileges.
Money market securities are essentially IOUs issued by governments, financial institutions and large corporations.
These instruments are very liquid and considered extraordinarily safe.
Because they are extremely conservative, money market securities offer significantly lower returns than most other securities.
In broad terms, you are limited to six transfers or withdrawals per month with no more than three transactions as checks written against the account.
The interest rate paid by a financial institution on a money market account is usually higher than its passbook savings rate.
Money market accounts also have a minimum balance requirement.
In contrast, a money market mutual fund (money fund) carries no FDIC insurance and is simply a collection of short-term debt investments held by that mutual fund.
Money market investments are debt securities that mature in 13 months or less.
Money market investments are also called cash investments because of the short maturities.
Certificate of Deposit (CD) – A time deposit with a bank.
CDs are generally issued by commercial banks but they can be bought through brokerages.
They bear a specific maturity date (from three months to five years), a specified interest rate, and can be issued in any denomination, much like bonds.
Like all time deposits, the funds may not be withdrawn on demand like those in a checking account.
The main advantage of CDs is their relative safety and the ability to know your return ahead of time.
You’ll generally earn more than in a savings account, and you won’t be at the mercy of the stock market.
Plus, in the
U.S. the Federal Deposit Insurance Corporation guarantees your investment up to $100,000.
Despite the benefits, there are two main disadvantages to CDs.
First of all, the returns are paltry compared to many other investments.
Furthermore, your money is tied up for the length of the CD and you won’t be able to get it out without paying a harsh penalty.
The essential function of a bank is to provide services related to the storing of value and the extending of credit.
The evolution of banking dates back to the earliest writing, and continues to the present day.
Currently the term bank is generally understood to be an institution that holds a banking license.
Banking licenses are granted by financial supervision authorities and provide rights to conduct the most fundamental banking services such as accepting deposits and making loans.
The word bank is derived from the Italian “banca”, which is derived from a German word which means “bench”.
The terms bankrupt and “broke” are similarly derived from “banca rotta” which refers to an out of business bank, having its bench physically broken.
Money lenders in
Northern Italy originally did business in open areas, or big open rooms, with each lender working from his own bench or table.
Typically, a bank generates profits from transaction fees on financial services and on the interest it charges for lending.
Checking Accounts – The most common type of a demand deposit offered by any banking institution.
A checking account lets you safely store your money in the bank and allows you to spend it anytime you want by writing a check.
There are many benefits to having a checking account.
The first is safety – checks are safer to carry around and send through the mail than cash.
Unlike cash, a blank check is worth nothing without the proper signature.
A second benefit of a checking account is proof of payment.
A cancelled check is as good as a receipt.
You can make a withdrawal from this type of account at any time without advance notice or penalty.
The account may or may not earn interest, depending on the policy of the financial institution.
Saving Accounts – A savings account is an agreement between a bank and a depositor whereby money is deposited in the bank in exchange for interest and safekeeping.
A liquid account that generally offers low or no minimum balance requirements, often carries a monthly service charge, and generally pays a low rate of interest.
The account usually has no restrictions on the number of transactions.
It’s wisest to open accounts at FDIC-insured institutions.
Savings accounts may be opened at banks – on and off the Web, credit unions and other financial institutions.
The amount of interest your money earns in a savings account often depends on the type of financial institution you have selected and the type of account.
Money Market Accounts – An interest-earning savings account offered by a FDIC-insured financial institution with limited transaction privileges.
Money market securities are essentially IOUs issued by governments, financial institutions and large corporations.
These instruments are very liquid and considered extraordinarily safe.
Because they are extremely conservative, money market securities offer significantly lower returns than most other securities.
In broad terms, you are limited to six transfers or withdrawals per month with no more than three transactions as checks written against the account.
The interest rate paid by a financial institution on a money market account is usually higher than its passbook savings rate.
Money market accounts also have a minimum balance requirement.
In contrast, a money market mutual fund (money fund) carries no FDIC insurance and is simply a collection of short-term debt investments held by that mutual fund.
Money market investments are debt securities that mature in 13 months or less.
Money market investments are also called cash investments because of the short maturities.
Certificate of Deposit (CD) – A time deposit with a bank.
CDs are generally issued by commercial banks but they can be bought through brokerages.
They bear a specific maturity date (from three months to five years), a specified interest rate, and can be issued in any denomination, much like bonds.
Like all time deposits, the funds may not be withdrawn on demand like those in a checking account.
The main advantage of CDs is their relative safety and the ability to know your return ahead of time.
You’ll generally earn more than in a savings account, and you won’t be at the mercy of the stock market.
Plus, in the
U.S. the Federal Deposit Insurance Corporation guarantees your investment up to $100,000.
Despite the benefits, there are two main disadvantages to CDs.
First of all, the returns are paltry compared to many other investments.
Furthermore, your money is tied up for the length of the CD and you won’t be able to get it out without paying a harsh penalty.
First Fidelity is a financial services firm that locates FDIC insured banks offering the highest CD yields nationwide
. First Fidelity Financial Group is not a state or federally insured financial institution, and is not affiliated with First Fidelity Bank, First Fidelity Trust, or First Fidelity Savings & Loan. In Arizona, Oklahoma and certain other states, offices may operate under the name Firstar Financial Group, LLC.
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