Banking is vital in our everyday lives, offering essential services that help manage finances, save for the future, access credit, and more. Even though there are many advantages to banking, we still find that 6% of households nationwide are unbanked, meaning no member of the family unit has a bank account. Understanding the benefits of banking empowers you to make informed decisions and ensure financial security for your future. Join United Way of Summit and Medina’s team as we share how banking can bring stability and growth to your financial journey!
What Is Banking?
Banking refers to the services provided by financial institutions that store and manage money, as well as facilitate transactions. This includes accepting deposits, offering loans, cashing checks for account holders, and providing savings accounts, checking accounts, and investment services. Banks play a vital role in the economy by helping individuals, families, and businesses manage their finances, access credit, and invest for the future.
Why Is Banking Important?
Next, you might ask, “why is banking important?” or maybe, “what is the purpose of a bank?”
There are many advantages of banking. Banking ensures financial security through savings and investments, provides access to credit for growth, and facilitates transactions. Additionally, a strong banking system supports overall economic stability, which benefits both individuals and their communities.
Financial Security
Bank accounts offer financial security by providing a reliable place for your money to be stored and grow, shielding it from loss or theft. With FDIC insurance, deposits are protected up to at least $250,000, giving you peace of mind that your savings are safe. Additionally, bank accounts allow you to monitor your spending, making it easier to budget, save, and track expenses. They promote financial responsibility, helping you build funds for emergencies and achieve your long-term savings goals. A bank account is more than a storage space for money—it’s a vital tool for financial security and progress.
Access to Credit
Without a bank account, it is difficult to gain access to credit. What is the importance of bank credit, though? Credit can take various forms, including loans, credit cards, and lines of credit, allowing individuals to finance purchases and invest in business opportunities. Good credit is essential for securing reasonable loan terms and interest rates.
Accessing credit involves a lender assessing your ability to repay them, which is typically done by studying your financial history. Without a bank account, a credit lender does not have a way to verify your financial trustworthiness. If you have no credit history, you can begin by opening a secured credit card, student credit card, or a low-limit card.
Money Management
Another purpose of banking is to facilitate financial transactions, which makes it easy to manage money. Services such as deposits, bill payments, and money transfers allow you to send and receive funds quickly and securely. With tools like debit and credit cards, you can make purchases even if you don’t have cash on hand. In fact, 57% of Americans use debit cards as their primary payment method. Banks prioritize security, protecting your information and funds through advanced technology.
What Are the Benefits of Banking?
There are many benefits of banking that will enhance your financial well-being. Savings accounts offer a secure way to store money and earn interest, while investment opportunities help grow wealth. Banks also provide financial advice to guide budgeting and investing decisions. Finally, the convenience of online banking allows for easy access to accounts and transactions anytime, making banking an essential tool for effective financial management. Here is an overview of the services banks provide.
Savings Accounts
Savings accounts provide a safe place to store money, protecting it from loss or theft while earning interest over time. They can be used to build an emergency fund for potential unexpected expenses, save for big purchases such as a home down payment, and more. They are accessible for withdrawals while still encouraging long term saving. Some savings accounts grow your money more than others, so check the interest rate you will earn and be sure to look into options for a high yield savings account.
Investment Opportunities
Another benefit of having a bank account is easier access to investment opportunities. An established relationship with a bank often includes personalized investment advice and tailored financial products. With funds readily available, you can easily transfer money to investment accounts or purchase stocks and mutual funds. Many banks also offer integrated investment services, allowing you to manage your investments alongside your savings.
Financial Advice
Many banks staff financial advisors who are available to meet with account holders. Financial advisors can help you budget, plan for the future, hit your savings goals, pay off debt, and more. No matter your current financial situation, the staff at your bank can offer helpful advice to get you where you want to be.
Convenient Online Banking
A final advantage of holding a bank account is the option to manage and monitor your funds digitally. You can conveniently check account balances, transfer funds, pay bills, and view transactions from your phone or computer. Additionally, online banking offers budgeting tools and automated services like scheduled bill payments and account alerts, helping you stay organized and avoid missed payments.
We Can Help!
Did you know that the average unbanked person spends 5% of their net income on unnecessary fees for alternative financial services? This can amount to $40,000 over a lifetime — don’t lose out on your hard earned money!
If you’re not sure where or how to open a bank account, United Way of Summit & Medina can help. Bank On Rubber City, a coalition led by United Way and the City of Akron, is committed to helping residents access safe and affordable banking products and services. Bank On Certified Accounts boast no minimum balance requirements, no overdraft fees, second chance checking opportunities, and more.
Open your Bank On certified account by contacting [email protected] or calling the Financial Empowerment Center at 330.685.9430. The Financial Empowerment Center also offers free one-on-one financial coaching that can help you with banking or other financial questions.