How checking accounts are very important to different sectors of the society

Why should investors open checking accounts when they could simply go for higher yielding investments? Obviously, an investor who still opens a checking account despite trying better investments has an ulterior motive in doing such. This article is going to discuss that particular motive for maintaining a checking account or a savings account.

There is a need to keep track of all the earnings from the investments. The best way to do this is to keep them all in a savings account. Because of the passbook options, the investor can easily keep track of all his financial assets. It becomes even more convenient for a person to look at a passbook than compile all his CDs’ and other investment papers just to keep track of his earnings. With a passbook account, you are provided with an accurate log of all the transactions that you completed with the bank. Thus, checking accounts were created for a different purpose: it is not to generate money for the investor but to keep track of the money being generated.

For example, your Jumbo CD is making about a thousand dollars every 6 months to 1 year. The most secure way to keep this compounded interest is to keep it in a checking account. Aside from the FDIC insurance that most banks promise to their clients, a bank is in the best position to use that idle money for more productive purposes. Now, we are going to the second discussion about the nature of banks and why checking accounts are important to the greater society.

This is just a simple illustration of what happens when you deposit money in a bank. If you are going to deposit your money in a checking account, then the bank will be able to use it to give loans to other loan applicants. These applicants will be screened on the basis of their ability to pay back the loan. Usually, banks provide loans to aspiring businesses that need capital to get their business going. This in turn stimulates the economy by providing capital to businesses.

The leading banks in the country also offer the best checking accounts. The more money people deposit in checking accounts equals an increase in assets for the bank. When there is more money within the bank, there is also more money that can be loaned to businesses or individuals.  When these loans are paid back, the banks get more profit. With more profit, they are able to provide more loans, and again more loans generate more profit. It is an unending cycle until the bank is able to increase its bank rates to attract potential depositors. It is all for the same purpose: earning more and giving more loans.

Thus, when CD rates increase, it only means to say that the bank is already stable and that it aims to attract more customers at the end of the day. This is affecting different sectors of the society—in a good way. All that is needed to be done is to get more investors to deposit their profit in a bank.

Those are the things that happen in bank transactions. Checking accounts are not only there to keep track of your CD rates through the years. Checking accounts were created to perform a social function that is not fully emphasized to most members of the society. With this article, we are hoping to inform you about the importance of checking accounts in stimulating our economy—especially during times of economic recession.