Banks are institutions that provide services to help corporate and personal customers manage their finances. These services include accounts, loans, credit lines, and investment options that allow customers to meet personal and financial goals. Banks are like businesses and will make money through their financial products. Loan interest allows banks to profit by lending customers money. Banks also charge ATM transaction and overdraft fees for additional revenue.
Many banks are one stop shops for a variety of investment products. At the same bank, you can open a checking account, line of credit, bill payment service, mortgage, and student loan account. Consumers who use many products at a bank may benefit from lower interest rates. For the most part, banks will allow you to open a checking or savings account free of charge. Many of these free services are available for free or as promotional offers. You may need to maintain a minimum balance or link certain bank accounts.
Checking accounts are ideal for everyday transactions. For most people, a portion of income funds daily, monthly, and weekly expenses while another portion goes to savings. Checking accounts help people manages their finances for everyday transactions, bills, and payments. Users can deposit and withdraw cash as needed without any limits, and users can pay for items directly from your checking account using a debit card. Think of a checking account as your disposable income.
If you take out too much money, you risk overdrawing your checking account. With overdrafts, your checking account will show a negative balance, and you may need to pay a penalty fee. To open and maintain a checking account, you will need to maintain a minimum balance. This minimum balance varies based on the type of bank account and the bank of your choice. Most checking accounts do not pay interest on balances. In any case, there are some banks that provide checking accounts with very low interest rates.
You may receive a debit card that is linked to your checking account. A debit card is not the same as a credit card. With a credit card, you are spending money from a line of credit, and with a debit card, you are spending your own money from your bank account. You can also write checks to pay people with money from your bank account. Account holders are responsible for ensuring that their bank accounts have enough money to honor these checks.
Savings accounts help customers save money and meet financial goals. Banks pay interest on the money that is in these types of accounts. For the most part, users cannot take money out of bank accounts. If you do need money from your savings account, you can transfer or withdraw cash without a penalty. If you take money out of your savings account more than six times in a month, you may be subject to a penalty, or you may not be able to withdraw the cash. Some banks may even shut down accounts that are repeatedly in violation.
A variety of investment options are available through banks. These include Individual Retirement Accounts (IRAs), certificate of deposit (CD) accounts, and mutual funds. Many of these types of accounts have certain tax applications, so it is important that users work with a financial advisor at a bank or elsewhere. These accounts have very strict limitations for withdrawing funds.