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Why Banking Works
Regarding financial management, business, even the professionals reach a consensus on what is the most effective, reliable and secure way to manage your money, and that is by the bank. Your bank is an effective way to manage your payments invoices, keep track of your transactions, receive your income and whatever foreign cash flow, and help you save effectively.
The last 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 continually add to your account whenever you can. Otherwise, your money will remain safe in your bank. Also, while it's staying in the bank, you are actually earning interest rates on your money.
What are the interest rates on savings? 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 costs. Indeed, the income they receive trickles down to you, their source of money. The interest rate on savings is actually an effective incentive system. Why is that? If you save more money in your bank account through your deposits and savings, you end up receiving a higher return on the interest rate of savings that others would .
Banks have a threshold value for you to be able to participate in the long term of the bank, higher yield savings schemes. term deposits, mutual funds and others require that you leave your money untouched for a longer period of time. In exchange for the use of bank your money for a long period of time, interest yield percentages 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 account time deposit or mutual funds. 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.
