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by John M. Roberts

Question: What are banks and what are their functions?

Answer: A bank is an institution that is set up for lending, borrowing, issuing, exchanging , taking deposits, safeguarding, or handling money under the laws and guidelines of the country, state, or municipal jurisdiction in which it is located.

Banks provide an array of services and benefits such as checking accounts and savings accounts, credit cards, ATM machines, home loans, business loans, and equity lines of credit. Banks are in business to offer general services to individuals, corporations, and to other businesses, whether the business is large or small.

Banks offer safe deposit boxes, electronic banking, electronic transfers of funds, cashiers checks and drafts, manage endowment funds and trust accounts, as well as other banking and related services.

Question: What is the primary reason for doing business with banks?

Answer: Most people do business with banks because it is a reasonably safe way to save money, pay their bills with checks, and to have use of their money when they need it. Banks can issue credit, deny credit, give loans on homes, farms, and ranches, and make loans to businesses for the purchase of inventory and to meet their payrolls.

The banking industry is wide and varied. It serves the needs of individuals and businesses, and may serve as depositories for the cities and states in which they are located.

Question: Are banks a good source for borrowing money?

Answer: Lending money is what banks do. Banks have always been a good source of loans for the purchase of homes, farms, businesses, cars, boats, and other necessities.

Question: How are banks in the United States regulated and is money safe when deposited?

Answer: Banks in the United States are regulated by federal and state laws and must follow the guidelines and federal monetary policies set by the Federal Reserve Board.

The Federal Deposit Insurance Corporation (FDIC) offers protection by insuring deposits up to $100,000 per account in member banks and savings and loan institutions so most bank accounts are safe.

Question: Are all banks the same?

Answer: No. Banks offer different services and some specialize in certain aspects of the banking industry. Some banks are small and localized, others operate regionally, while some operate nationally and/or internationally.

The fees and costs to do business with banks vary, also. There are differences in interest rates charged for loans and on credit cards, as well as the amount of interest paid on savings accounts, certificates of deposits (CDs), treasury bills (T-bills), and other services that banks offer.

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