banking tutorial >> Step 1 >> banking basic >> part 2 >> how do banks work

How Do Banks Work?

Banks are in business to make a profit.  So they have an operation setup mainly for that purpose. That banking operation consists mainly of you the consumer (the depositor and borrower) and the bank itself.

Things That the Bank Do For Consumers

1)  Banks allows consumers an opportunity to create accounts called Banking Accounts
2)  They make loans to consumers
3)  They offer financial products
4)  They offer financial services

Banking Accounts

There are several kinds of banking accounts.

  • Savings Account
  • Checking Account
  • Interest Bearing Checking Accounts
  • Certificates of Deposits (CDs)
  • Money Market Account

How Many Accounts Can You Have?

You can choose to have one, two or all of those 
accounts.

Once you open an savings or checking account you can then start making deposits into your account(s).

Saving Account and Interest

When you make a deposit into your savings account the bank will usually pay you interest on the money you deposited.

Checking Account and Interest

Unless you have an Interest-Bearing Checking Account your checking acccount  will not draw interest on the money that's deposited. Consumers that open a Certificate of Deposit can't make any deposit on the Certificate because the money that was used to purchase the CD can’t be touched for a certain amount of time which is usually decided upon by the individual that open the account.

Money Market Account and Interest

Consumers that open a Money Market Account are required to maintain a certain balance before the bank pays interest.

Loans That Banks Make

  •       Mortgage Loan
  •       Home Equity Loan 
  •       Auto Loan
  •       Student Loan
  •       Personal Loans
  •       Business Loans

Financial Products That Banks Offers

  • Some Insurance Products
  • Some Investment Products

Please note that not all banks offer the same financial products.  Therefore you will need to inquire from your bank about the financial products that they offer.

Banking Services Banks Offers to Customers

  • Credit Cards
  • Merchants Accounts
  • Check Cards
  • Debit Cards
  • ATM Card
  • Wire Transfer
  • Electronic Transfer
  • Notary Public
  • Certified Checks
  • Cashier’s Checks


Continue  Learning banking basics >>- Banking Services
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