A Bank is a company that is licensed to hold and lend money. Banks are the main source of credit to individuals and businesses, supplying funds for people to buy homes, cars and other big ticket items as well as lines of credit that companies use to meet payroll or make other purchases. They provide checking and savings accounts, as well as a variety of other services, such as insurance, debit and credit cards.
Banks make their profit by taking in money from depositors and lending it out to borrowers, charging them interest. They also make revenue from fees charged for specific services and financial advice. Banks try to manage their assets and liabilities by keeping sufficient cash reserves, investing in marketable securities that can be quickly converted to cash, and providing loans to people or businesses that are likely to repay them within a specified time period.
The bank industry is highly regulated by state and national authorities, with protections like FDIC insurance covering deposits up to $250,000. Many consumers weigh factors such as fees, convenience of banking locations or online, range of services offered and stability of the institution when choosing a bank to fit their personal needs. Though it’s common to hear that people don’t need a bank account, the truth is that banks offer a safer, less expensive and simpler way to manage your money and build credit. Especially with today’s advanced technology, you can easily check your balance, pay bills and track transactions from the comfort of your smartphone or computer.