BANKING AND FINANCE

Today's Scripture: Titus 3

2011-10-24T06:21:00.001-07:00

Today's Scripture: Titus 3

1Put them in mind to be subject to principalities and powers, to obey magistrates, to be ready to every good work,

2To speak evil of no man, to be no brawlers, but gentle, shewing all meekness unto all men.

3For we ourselves also were sometimes foolish, disobedient, deceived, serving divers lusts and pleasures, living in malice and envy, hateful, and hating one another.

4But after that the kindness and love of God our Saviour toward man appeared,

5Not by works of righteousness which we have done, but according to his mercy he saved us, by the washing of regeneration, and renewing of the Holy Ghost;

6Which he shed on us abundantly through Jesus Christ our Saviour;

7That being justified by his grace, we should be made heirs according to the hope of eternal life.

8This is a faithful saying, and these things I will that thou affirm constantly, that they which have believed in God might be careful to maintain good works. These things are good and profitable unto men.

9But avoid foolish questions, and genealogies, and contentions, and strivings about the law; for they are unprofitable and vain.

10A man that is an heretick after the first and second admonition reject;

11Knowing that he that is such is subverted, and sinneth, being condemned of himself.

12When I shall send Artemas unto thee, or Tychicus, be diligent to come unto me to Nicopolis: for I have determined there to winter.

13Bring Zenas the lawyer and Apollos on their journey diligently, that nothing be wanting unto them.

14And let our's also learn to maintain good works for necessary uses, that they be not unfruitful.

15All that are with me salute thee. Greet them that love us in the faith. Grace be with you all. Amen.

learn
What is the Meaning of this Text?

bedience to magistrates, and becoming behaviour towards all, are enforced from what believers were before conversion, and what they are made, through Christ. (1-7) Good works to be done, and useless disputes avoided. (8-11) Directions and exhortations. (12-15)

Verses 1-7: Spiritual privileges do not make void or weaken, but confirm civil duties. Mere good words and good meanings are not enough without good works. They were not to be quarrelsome, but to show meekness on all occasions, not toward friends only, but to all men, though with wisdom, (Jam 3:13). And let this text teach us how wrong it is for a Christian to be churlish to the worst, weakest, and most abject. The servants of sin have many masters, their lusts hurry them different ways; pride commands one thing, covetousness another. Thus they are hateful, deserving to be hated. It is the misery of sinners, that they hate one another; and it is the duty and happiness of saints to love one another. And we are delivered out of our miserable condition, only by the mercy and free grace of God, the merit and sufferings of Christ, and the working of his Spirit. God the Father is God our Saviour. He is the fountain from which the Holy Spirit flows, to teach, regenerate, and save his fallen creatures; and this blessing comes to mankind through Christ. The spring and rise of it, is the kindness and love of God to man. Love and grace have, through the Spirit, great power to change and turn the heart to God. Works must be in the saved, but are not among the causes of their salvation. A new principle of grace and holiness is wrought, which sways, and governs, and makes the man a new creature. Most pretend they would have heaven at last, yet they care not for holiness now; they would have the end without the beginning. Here is the outward sign and seal thereof in baptism, called therefore the washing of regeneration. The work is inward and spiritual; this is outwardly signified and sealed in this ordinance. Slight not this outward sign and seal; yet rest not in the outward washing, but look to the answer of a good conscience, without which the outward washing will avail nothing. The worker therein is the Spirit of God; it is the renewing of the Holy Ghost. Through him we mortify sin, perform duty, walk in God's ways; all the working of the Divine life in us, and the fruits of righteousness without, are through this blessed and holy Spirit. The Spirit and his saving gifts and graces, come through Christ, as a Saviour, whose undertaking and work are to bring to grace and glory. Justification, in the gospel sense, is the free forgiveness of a sinner; accepting him as righteous through the righteousness of Christ received by faith. God, in justifying a sinner in the way of the gospel, is gracious to him, yet just to himself and his law. As forgiveness is through a perfect righteousness, and satisfaction is made to justice by Christ, it cannot be merited by the sinner himself. Eternal life is set before us in the promise; the Spirit works faith in us, and hope of that life; faith and hope bring it near, and fill with joy in expectation of it.

Verses 8-11: When the grace of God towards mankind has been declared, the necessity of good works is pressed. Those who believe in God, must make it their care to maintain good works, to seek opportunities for doing them, being influenced by love and gratitude. Trifling, foolish questions must be avoided, and subtle distinctions and vain inquiries; nor should people be eager after novelties, but love sound doctrine which tends most to edifying. Though we may now think some sins light and little, if the Lord awaken the conscience, we shall feel even the smallest sin heavy upon our souls.

Verses 12-15: Christianity is not a fruitless profession; and its professors must be filled with the fruits of righteousness, which are by Jesus Christ, to the glory and praise of God. They must be doing good, as well as keeping away from evil. Let "ours" follow some honest labour and employment, to provide for themselves and their families. Christianity obliges all to seek some honest work and calling, and therein to abide with God. The apostle concludes with expressions of kind regard and fervent prayer. Grace be with you all; the love and favour of God, with the fruits and effects thereof, according to need; and the increase and feeling of them more and more in your souls. This is the apostle's wish and prayer, showing his affection to them, and desire for their good, and would be a means of obtaining for them, and bringing down on them, the thing requested. Grace is the chief thing to be wished and prayed for, with respect to ourselves or others; it is "all good."

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How can We Apply this Scripture familyto our Life?

In our Bible Study here in the book of Titus we have made application in Titus chapter 1 for the Right Leadership in the Church, in Chapter 2 our responsibility to live right in the Church, and here in Chapter 3 to Obey Government, Avoid useless arguments. We all have a responsibility to live what we study in the scriptures. To not just hear the Word but Obey and live it out in every decision we make. Keeping the main thing, the main thing, Sharing what God did for us through His Son. Once we learn it, we live it, then teach it to the next generation. I have heard of Churches splitting because of the color of the carpet in a building plan. I have heard of Christians not paying their taxes. Fighting within the Church for anything and everything. Be tolerant of believers for their standards and level of their Christian growth. It is really simple, get saved, share Christ, and love others as Christ has loved us. Keep the main thing the main thing.

Bishop Uchenna C. Okonkwor

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...Continuation

2010-08-11T14:12:00.003-07:00

Does the Federal Reserve process all the checks Americans write?
No. The Federal Reserve Banks handle less than one-third of all U.S. checks. Private entities
process the rest.
Is the Federal Reserve responsible for regulating and supervising the entire U.S.
banking system?
No. It shares this responsibility with other federal and state regulatory agencies.
Does the Federal Reserve set interest rates?
The Federal Reserve is responsible for U.S. monetary policy. This means it makes policies that
influence how much money and credit will be available to the U.S. economy. Interest rates
often go up or down in response to the Federal Reserve’s monetary policy decisions, but only
the discount rate is set directly by the Federal Reserve. The discount rate is the rate banks pay
when they borrow from the Federal Reserve.
The Federal Reserve
does not print money.
U.S. paper money is
printed by the Bureau
of Engraving and
Printing, which is part
of the U.S. Treasury
Department.
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When was the Federal Reserve established?

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When was the Federal Reserve established?
Congress created the Federal Reserve System in 1913 to help make the U.S. banking system
safer and more efficient.
How many Federal Reserve Banks are there?
There are twelve Federal Reserve Banks. Each of the twelve Reserve Banks serves its own
Federal Reserve District.
Where is the headquarters for the Federal Reserve?
The System’s headquarters is in Washington, D.C. It is called the Board of Governors of the
Federal Reserve System.
Does the Federal Reserve lend money to businesses and consumers?
No. The Federal Reserve does not lend money to private borrowers, but it sometimes lends
money to banks when the need arises.
Does the Federal Reserve print U.S. paper money?
No. Although Federal Reserve Notes account for almost 100 percent of the U.S. paper money
in circulation, the notes are actually printed by the Bureau of Engraving and Printing, which
is part of the U.S. Treasury Department. The paper money is then shipped to the Federal
Reserve Banks and their branches. When banks need cash for their customers’ needs, they
order it from the Federal Reserve Bank in their District. Also, since money gradually wears out,
the Federal Reserve Banks process cash in order to determine its fitness. Worn out bills are
shredded; new bills are introduced into the system to replace the old ones.
Do all Federal Reserve Banks store gold bars in their vaults?
Only the Federal Reserve Bank of New York has a working gold vault, and almost all of the
gold in its vault is foreign-owned. The U.S. government’s gold is held at Fort Knox, Kentucky,
the U.S. Mints in Denver and Philadelphia, the San Francisco Assay Office of the U.S. Mint,
and the U.S. Bullion Depository in West Point, New York.
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How does the Federal Reserve fit into the U.S. banking system?

2010-08-11T14:09:00.001-07:00

How does the
Federal Reserve fit into
the U.S. banking system?
Although the Federal Reserve is often in the news, not everyone understands what it is and
what it does. Perhaps the best way to clear things up is to have a Federal Reserve “Q & A” to
cover some of the most common questions that people ask.
What is the Federal Reserve?
It is the central banking system of the United States.
What does it do?
The short answer is that the Federal Reserve is:
• a bank for other banks,
• a bank for the U.S. government, and
• responsible for U.S. monetary policy, which influences
how much money and credit will be available to the U.S. economy.
It also helps to:
• supervise and regulate banking institutions to ensure the safety
and soundness of the nation’s banking and financial system
• protect the credit rights of consumers, and
• maintain the stability of the financial system by helping to
contain risks that may arise in financial markets.
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Do you lose money if your bank is robbed?

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Do you lose money
if your bank is robbed?
No. Nearly all banks have private insurance that covers them if they are robbed. (It is not the
same as federal deposit insurance.)
In addition, most banks take elaborate measures to safeguard the cash and other valuable items
left in their care. Bank vaults have long been protected by reinforced concrete walls, time locks,
and metal alloy doors that resist drilling and explosions.
At one time, armed security guards stood watch over banks, but today most banks seem to
have decided (wisely) that they would rather not expose their customers and employees to
gunplay. Shotguns and revolvers have been replaced by closed-circuit television cameras that
maintain a constant watch over everyone who enters or exits the bank.
Another innovation is the exploding dye pack. In certain cases, bank employees are able to
place a package of red dye in with the robber’s stash of stolen cash. Later, when the crook
opens the stash, the concealed dye pack explodes, covering the robber and the ill-gotten
money with dye that won’t wash off.
Most banks take elaborate
measures to safeguard
valuables. Shotguns and
revolvers have been
replaced by closed-circuit
television cameras that
maintain a constant watch
over everyone who enters
or exits a bank.
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Do you lose money if your bank fails?

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Do you lose money
if your bank fails?
The Federal Deposit Insurance Corporation (FDIC) has protected bank deposits since 1934. In
all that time, no one has lost money that was FDIC-insured. Federal deposit insurance covers
most types of deposits, including savings deposits, checking deposits, and certificates of deposit.
The basic insured amount is $100,000.
In the days before federal deposit insurance, the U.S. banking system was plagued by bank
“runs” or “panics.” At the slightest hint of trouble, depositors would run to the bank and line
up to withdraw their money. All too often, only the first few people in line had any hope of
ever seeing their money again; others lost everything. Even healthy banks sometimes failed after
rumors caused depositors to panic and withdraw their money.
For many years, the public seemed willing to accept the losses. But then came the Great
Depression of the 1930s, and financial pressures forced thousands of banks to close their
doors forever. Losses ran into the hundreds of millions of dollars, and many people lost their
life savings.
The wave of bank failures shattered public confidence in the banking system, and Americans
looked to the federal government for help. Congress responded by establishing the FDIC,
which provided deposit insurance coverage of up to $2,500 per depositor. Public confidence
rebounded, and bank failures declined from approximately 4,000 in 1933 to 62 in 1934.
Over the years, the federal deposit insurance limit has increased, and federal deposit insurance
has helped to maintain public confidence in the U.S. banking system. Bank failures have not been
eliminated, but long lines of panic-stricken depositors have become an uncommon sight.

Or take the case of Bedrock Bank . . .

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Or take the case of Bedrock Bank . . .
Bedrock Bank Gets Too Big Too Fast
Bedrock Bank’s new president was determined to turn his bank into the region’s biggest
lender. Bedrock’s loan officers got the message and started making as many loans as they could
for condominium developments, shopping centers, office buildings, and high-priced suburban
housing developments. Loan applications were not always checked as closely as they had been
in the past, and some of the loans were approved more quickly than they had been in the old
days. But nobody seemed concerned because the local economy was strong and real estate
values were rising rapidly.
Everything seemed fine; everyone was making money. But then the economy slowed down, and
things took a turn for the worse. The weak economy forced many businesses to close, leaving
lots of vacant office space. Real estate values plummeted, and many developers fell behind on
their loan payments.
In the end, Bedrock Bank was losing so much money on bad real estate loans that government
regulators were forced to step in and close it. The regulators tried to find a buyer for Bedrock,
but no other bank wanted to get stuck with all the loans that had gone bad. Eventually,
another bank agreed to buy Bedrock if the federal government would agree to keep many of
the problem loans.
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Why do banks fail?

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Why do banks fail?
A bank is a business, and like other businesses, they can fail. Sometimes they fail because the
people who run them make poor business decisions such as expanding too quickly or putting
too much money into one type of loan.
Sometimes they fail because of fraud. Maybe the president makes questionable loans to friends
or hires unqualified relatives and pays them huge salaries. But banks also go out of business
because changing economic conditions make it difficult or impossible for borrowers to repay
their loans. Here’s an example.
Gusher National Bank Slips on Falling Oil Prices
Falling energy prices mean cheaper gasoline and lower home heating bills. So, falling oil prices
must be good, right?
Not for everyone! Take the case of Gusher National Bank. Gusher was very aggressive in
making loans to oil and natural gas companies that had no problem repaying their loans when
energy prices were high. The loans spelled big profits for Gusher, and everyone agreed that
Gusher’s executives were smart business people who really knew how to make money.
Then the economy slowed down, and the demand for energy fell. Factories burned less oil and
natural gas. Truck drivers, commuters, and vacationers drove fewer miles and burned less fuel.
As a result, energy prices dropped sharply, and many energy companies fell behind on their loan
payments. Some even stopped making payments altogether.
Months passed, oil prices remained low, and more energy companies fell
behind on their payments. Finally, Gusher lost so much money to bad loans
that government regulators had to step in and close the bank. Gusher had
fallen victim to changing economic conditions—falling energy prices and a
high concentration of loans to energy companies.
A bank is a
business, and
like other
businesses,
they can fail.
31

Why do banks fail?

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Do banks keep large amounts of gold and silver in their vaults?

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Do banks keep large
amounts of gold and
silver in their vaults?
Today, banks rarely keep gold or silver in their vaults. That’s because our paper money is no
longer backed by gold or silver, and our coins don’t contain precious metal.
The U.S. government still holds millions of ounces of gold and silver, but citizens and foreign
governments can no longer exchange their U.S. paper money for it. The government’s gold
and silver are considered valuable assets rather than forms of money. Today’s coins and paper
money are backed by the “full faith and credit” of the U.S. government.
If that makes you a little uneasy, try the following exercise. Put a ten-dollar bill and a blank piece of
paper on a tabletop, and ask people to choose between the two. Chances are everyone will choose
the ten-dollar bill. Why? After all, neither the ten-dollar bill nor the blank piece of paper is backed
by gold or silver.
The difference is that people all over the United States will accept the ten-dollar bill as payment
if you want to buy something. But you would have a hard time finding someone willing to accept
the blank piece of paper. That’s because the ten-dollar bill is backed by the promise of the
United States government, and to most people, that promise is as good as gold.

Continuation

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Some merchants offer you the opportunity to get additional cash back when you pay for a
purchase with your debit card. You can also use your debit card at an ATM if you need to
withdraw cash from your account, but if the ATM is not part of your bank’s network, you may
have to pay a fee.
One other major difference between debit cards and credit cards is that you don’t have as
much legal protection if your debit card is lost or stolen. On a lost or stolen credit card, the
most you’re responsible for is $50. But if someone steals your debit card, you could be responsible
for up to $500 in fraudulent charges or transfers unless you report the loss or theft
of your card within two business days. You risk unlimited loss if an unauthorized charge or
withdrawal appears on your statement, and you don’t report it within 60 days. So always be
sure to check your monthly bank statements!
The card that may come closest to being “plastic money” is the stored value card. Gift cards
and phone cards are the two types that most people know best. The cards are “loaded” with
a certain dollar amount—$10, $50, $100, or any other amount—and that amount decreases
with each use. For example, if someone gives you a $50 gift card to Bob’s Big Buy, and you buy
something there for $30, you will still have $20 “stored” on the card. Two things to keep in
mind about stored value cards: 1) You can’t use them in as many places as credit cards or debit
cards. If you receive a gift card to Bob’s Big Buy, that’s the only place you can use it, and 2) They
really are “just like cash” in that you’re pretty much out of luck if they are lost or stolen.
When you use a
credit card you are
actually taking out
a loan—buying
something now,
and agreeing to pay
for it later.
29

Credit cards, debit cards,stored value cards:

2010-08-11T14:00:00.001-07:00

Credit cards, debit cards,
stored value cards:
What’s the difference?
Credit cards are not a form of money, even though people often refer to them as “plastic
money.” When you use a credit card you are actually taking out a loan—buying something now
and agreeing to pay for it later—and sooner or later you will have to pay the bill for all those
things you’ve bought.
Many banks issue credit cards, even to people who aren’t regular customers. Before issuing you
a credit card, a bank will require you to complete an application form and will examine your
credit record to see if you have a history of paying back your debts on time.
Sometimes people run up credit card bills that are too big to pay off every month. When that
happens, they must pay a monthly finance charge that can sometimes top 20 percent a year.
In addition, banks (and other companies that issue credit cards) sometimes charge their
cardholders an annual fee.
They also charge merchants a fee for making the credit card service available. Finance charges,
annual fees, and merchant fees have become an important source of income for banks.
Debit cards look like credit cards, but they are very different. When you use a debit card at
the gas pump or at a store, the amount of the purchase is electronically deducted from your
bank balance. It will show up on your monthly bank statement, but there’s no monthly bill
because the amount of each purchase is deducted almost immediately from your account.

Continuation

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Technology has made it possible to bank from the comfort of your own home. Banks offer
software packages that allow customers to debit or credit their accounts, check their account
balances, or even apply for a loan. Consumers can make these transactions online.
There are even “virtual banks” that have no physical bank office in a traditional way. They
provide all of their services to their customers over the internet. For more information on
internet banking, check out What You Should Know About Internet Banking on the Federal
Reserve Bank of Chicago web site: http://chicagofed.org/consumer_information/what_you_
should_know_about_internet_banking.cfm
Technology has
made it possible
to bank from
the comfort of
your own home.
26

What is electronic banking?

2010-08-11T13:58:00.001-07:00

What is electronic banking?
The bank closes in ten minutes. Even if you make it there in time to cash your check, your
nerves will be frazzled. Isn’t there an easier way?
Yes, there is. Electronics and computers have turned banking into a round-the-clock business.
Automated teller machines (ATMs) now make it possible for you to do much of your banking
whenever you choose.
ATMs are computers that are much like limited-service bank branches. You can use them to
make a withdrawal, make a deposit, make a loan payment, transfer money from one account to
another, or check your account balance. In many cases, automated teller machines of different
banks are linked together in networks so you can use them when you travel to a different part
of town, another state, or even another country. All you need is a plastic card from your bank
and your own password.
Tired of rushing to the bank to cash your paycheck? Ask your employer about direct deposit,
a banking service that makes it possible for you to have your money electronically added to
your checking account every payday. Instead of receiving a paycheck, you receive a statement
that tells you your money has been deposited in your account. Direct deposit is popular among
people who receive Social Security checks or pension checks because it saves them the bother
of standing in line at the bank, battling bad weather, or worrying about being robbed on the
way home from the bank.
Another electronic banking service is called electronic funds transfer, or EFT. By using EFT, a
bank can transfer large amounts of money to another bank by sending an electronic message.
Electronic transfers take only an instant. An electronic message instructs a computer to deduct
a certain amount of money from one bank account and then add the same amount to another
bank account. The message is sent, and the appropriate amount is transferred. No cash or
paper changes hands, but money is transferred just the same.
25

Continuation

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Up until 2004, the check had to travel all the way back to your aunt’s bank by truck or by plane.
If there was enough money in her account to cover it, her bank would “clear” the check. If
there wasn’t enough, her bank would stamp it “NSF”—Not Sufficient Funds—and “bounce”
it back to your bank. And on top of all that, your aunt’s bank had to send her cancelled checks
back to her every month, along with her account statement.
All that paperwork might have been OK back in 1940, or even 1970, when Americans wrote
fewer checks. But as checks became more popular, banks spent more and more time and
money moving billions of pieces of paper around the country each year—not the best use of
resources, especially when new technology offered a more efficient way to do things.
In 2004, Check 21 went into effect. The new federal law made it possible for banks to handle
more checks electronically. Instead of physically moving checks from one bank to another,
banks can now electronically transmit images of the checks they process. It’s a lot faster and
less costly.
For more information on Check 21, see Frequently Asked Questions about Check 21,
http://www.federalreserve.gov/paymentsystems/truncation/faqs2.htm

What are checks, and how do they work?

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What are checks,
and how do they work?
You reach for your wallet and it’s not there. Panic gives way to despair when you realize that
your wallet is gone and so is your cash. Chances are you’ll never see the cash again.
The consequences are not nearly as serious if you lose your checkbook. All you do in that case
is close your checking account and open a new one. After that, your lost or stolen checks are
worthless to anyone who might try to use them.
Because they are safe and convenient, checks have become a popular method of paying for
things or transferring money. But what exactly is a check?
In simple terms, a check is a written set of instructions to your bank. When you write a check,
you are instructing your bank to transfer a specific amount of money from your checking
account to another person or an organization. You can even write a check to convert some of
the money on deposit in your checking account into cash.
When you fill in the blank spaces on one of your checks, you are telling your bank three things:
1) how much of your money you want to transfer, 2) when you want to transfer it, and 3) to
whom you want it to go. You authorize the transfer by signing the check.
So, if your favorite aunt sends you a $50 check for your birthday, she’s actually telling her bank
to transfer $50 from her account to you. But when you go to cash her check or deposit it in
your account, how does your bank know if your aunt actually has enough money in her account
to cover the check?
The answer to this question isn’t what it used to be.
23

AMAZON

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What happens when you apply for a loan?

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What happens when you

apply for a loan?

Last week your mechanic advised you not to spend any more money on the faithful old car

that has carried you over many miles of highway. The time has come to shop around for a new

one. But cars were a lot cheaper when you last bought one. This time you’ll have to take out

a big loan.

You don’t necessarily have to borrow from the bank where you have an account. You should

shop around for a lender that offers the best deal, including the lowest interest rate. Sometimes

car companies offer low-interest, or even no-interest loans. And don’t forget the internet. You

can research a wealth of online resources from the comfort of your home or office.

Your first step is to figure out how much you can afford to borrow. You will not know if you

can afford the new car—

or if a lender will let you borrow the amount want—until after you

complete a loan application. In addition to routine personal information such as your name,

address, telephone number, and Social Security number, a loan application also asks for information

on how much money you earn, how long you have worked at your current job, and

how much money you already owe on credit card bills and other debts.

The next step is for the lender to evaluate your application and decide if you are a “good risk.”

Before they lend you money, lenders want to be as certain as possible that you will be able

to pay them back. Do you earn enough money to keep up with your loan payments? Do you

have a history of paying your debts on time? To answer these questions, lenders rely heavily

on credit bureaus and credit reports. There are approximately 1200 local and regional credit

bureaus in the United States. All are private companies (not government agencies), and most

are linked by computer to three nationwide credit bureaus. They provide much of the information

that lenders need to evaluate loan applications.

20

Continuation

2010-08-11T13:13:00.000-07:00

But, there is another side to interest. When someone borrows money from a bank, the bank

charges interest, and it charges borrowers a higher rate than it pays savers. For example, it

might pay savers 3 percent and charge borrowers 8 percent. The difference, 8 percent minus

3 percent, goes to the bank. Charging interest on loans is one of the main ways for a bank to

make money.

The rate of interest a bank charges depends largely on two things:

• how many people want to borrow money, and

• how much money banks have available to lend.

If a bank has plenty of money to lend, and the demand to borrow money is not particularly

strong, interest rates will tend to be low in order to attract borrowers. But when banks have

a smaller amount of money to lend, and the demand to borrow is fairly strong, interest rates

will rise. As a depositor, you want interest rates to be high, but as a borrower, you want them

to be low.

When it comes to paying interest on savings deposits, there usually isn’t a big difference

between banks. They pay just enough to stay competitive with one another and attract

depositors. So, if one bank is offering a much better (higher) rate than most other banks,

try to find out why. And remember the old saying: If something sounds too good to be true, it

probably is.

19

What happens to money after you deposit it?

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What happens to money

after you deposit it?

What happens to a $10 bill after you deposit it in your savings account? Does the bank teller

take it to a vault and put it into a separate compartment or cubbyhole marked with your name

and account number? No.

The bank begins by adding $10 to the amount that is already in your account (your existing

balance). Your $10 deposit and your new balance are then recorded in your bank book and

in the bank’s computer system. The $10 bill you deposited is mixed in with all the other cash

your bank receives that day.

When you and other customers deposit money in a bank, the bank “puts most of it to work.”

Part of the money is set aside and held in reserve, but much of the rest is loaned to people

who need to borrow money in order to buy a house or a car, expand a business, buy farm

equipment, or do any of the other things that require people to borrow money.

Of course, banks do not lend money just to provide a service. They do it to make money.

Here’s how it works.

When you keep your savings in a bank, the bank pays you extra money, which is called interest.

The interest is added to your account on a regular basis, usually once a month.

Let’s say a bank pays its depositors interest of 3 percent a year on their savings. In simple terms,

that means if you keep $100 in your savings account, the bank will add $3 to your account

balance during the course of a year.

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Is it difficult to open a bank account?

2010-08-11T13:09:00.001-07:00

Is it difficult to open

a bank account?

You’ve finally decided to take the plunge. With your cash tucked deep in your pocket, you walk

into the bank and ask to open a savings account.

The bank’s receptionist directs you to a desk where a customer service representative

will help you with the paperwork. To your surprise, the only form you need to fill out is a

signature card, which requires you to sign your name and then print your name, address,

telephone number, date of birth, social security number, and your mother’s maiden name (as

a means of further identification). After you complete the signature card, you receive a bank

book (sometimes called a passbook) that lists your account balance (the total amount of money

in your account).

Whenever you make a deposit (put money in) or a withdrawal (take money out), the

transaction is recorded in your bank book. It is very important for you to keep track of the

activity in your account.

You don’t need lots of money to start a savings account. Some banks let you open one with as

little as $20. Nor do you need to wait until you are 18 years old. In most cases, you can open

a savings account as soon as you are old enough to sign your name, or even earlier than that if

you open the account with a parent or guardian.

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