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					Why Banking Works


When it comes to financial management, even business professionals reach a consensus as to what is the
most effective, reliable, and secure means to manage your money, and that is through the bank. Your bank is
an effective means to manage your bills payments, keep track of your transactions, receive your income and
whatever extraneous cash inflow, and help you save effectively.


The last one is perhaps the most obvious feature of the bank that people do not take advantage of. A bank,
being a financial intermediary, can actually help you save money efficiently. Here’s how.


First, you are required to keep what is called a maintaining balance in your bank account. This means that
even if you make deductions in your account, the bank requires you to save a bare minimum in order to
continue enjoying their services. And yes, that translates to a forced saving on your part.


Another feature of bank saving is the fact that you are free to continuously add to your account whenever
you can. Otherwise, your money will remain safe in your bank. Moreover, while it’s staying in the bank, you
are actually earning interest rates on your money.


What are savings interest rates? These are payments made by the bank to you for leaving your money in the
bank. By depositing your money in the bank, your bank utilizes a portion of it in its loan operations where it
subsequently earns through interest and loan charges. In effect, the income they receive trickles down to
you, their source of money. This savings interest rate is actually an effective incentive system. Why so? If
you save more money in your bank account through your deposits and savings, you end up receiving a
higher return on the savings interest rate than other people would.


Banks have a threshold amount for you to be able to participate in the bank’s long-term, higher yield savings
schemes. Time-deposit accounts, mutual funds and the like require you to leave your money untouched for a
longer period of time. In exchange for the bank’s use of your money for a longer period of time, the
percentages of interest return are double those that you would get in a regular savings account. You can add
increments of a certain amount in order to increase the capital you invest in your time-deposit account or
mutual fund. An increased account obviously translates to bigger interest gains.


Talk to your local bank about their savings schemes. They offer various mechanisms to encourage us
consumers to entrust their money to them. In a bank, your money is in a safe place, and it is growing while it
stays there.


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Nikola Paborsky Nikola Paborsky Mr http://insuracebuffs.com
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