What is banking?
Banking refers to the services offered by a bank or financial institution. Banks deal primarily with two types of services:
- Deposit accounts (checking and savings)
A checking account allows you to deposit or withdraw money easily for short-term spending. On the other hand, savings accounts are generally long-term deposits, which protect and increase your wealth.
Banks make money by loaning money and charging interest. If you have a savings account, you receive interest on the money in your account because banks use your money to fund loans for other people. You can, however, still take money out of your savings account whenever you want.
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Why is banking important?
It’s important to understand and utilize banking, as it offers a variety of benefits:
- Access to credit
- The ability to withdraw funds easily
- Services to help manage money
- and much more
A bank is also the safest place to keep your money. Banks are insured by the Federal Deposit Insurance Corporation (FDIC), which insures any money you deposit into the bank. Even if the bank loses a loan or runs into trouble financially, your money is safe.
- The First Woman’s Bank of Tennessee, founded in 1919, was the first bank run entirely by women.
- Italian banks take Parmesan cheese as collateral for loans and keep hundreds of thousands of cheese wheels in their own climate-controlled vaults for the two years it takes them to mature.
- In North Carolina, a man held up a bank for $1 so that he could be sent to prison and receive free healthcare.
- To open vaults at the Bank of England, you need a key that is three feet long.