Part E Reading

Bank Savings

A bank, like any other business, sells its services to make a profit for its shareholders.However, unlike most business, it is conducted chiefly with other people’s money, i.e., depositors’ funds.

Bank deposits originate in two ways: 1.from the surrender of cash or checks to the bank; 2.from bank loans in the form of deposit credit.When cash or checks are received, we call them primary deposit; if the deposits are created in the lending process, they are called derivative deposit.When he presents cash, the entirely new deposit is created.When he presents checks and drafts drawn against existing deposits, these cash items do not represent new deposits but rather the transfer of existing balance from one depositor to another and possible from one bank to another.They add to the balance of the depositor and to the assets of the recipient bank but not to the total deposits of the banking system as a whole.

A modern bank provides one of the most important services is regular passbook savings.If you went to a bank to open a savings account, the first you would be asked to fill out a form and present any means of your identification,such as ID card, passport etc..Then you would be given a passbook in which your initial deposit would be recorded.All deposits and withdrawals from your account are entered into your passbook.This means that the passbook contains an actual record of savings you have at any time.With a regular passbook savings account, you would be able to withdraw money whenever you needed it.All you would have to do is to fill out a withdrawal slip and present it, along with your passbook, to the teller at the counter.

In most cases, all banks pay interest on savings accounts.The interest rate varies from country to country, but the general range is from 3 to 5 percent.If you knew that you would keep your money in the bank for a certain period of time, you could get a highest interest rate by buying a savings certificate.The longer the term of the certificate, the longer the bank can keep the money, and the higher the rate of interest paid.The terms can be one month, three months, six months, one year, two years etc..