Banks and Banking

Text 13

History of Money

People have used money for more than 4,000 years. In the 600s BC the kingdom of Lydia in what is now Turkey began to make coins. It was probably the first government to do so. These coins were a combination of silver and gold, called electrum. Many ancient peoples, including the Greeks and the Romans, also used coins.

The first types of paper money were used in China more than 1,000 years ago. Early paper money was simply a written promise to pay a certain amount of gold or silver money. The paper money was valuable because it could be traded for gold or silver. Later, governments began printing paper money. In the 1900s most governments made paper money valuable on its own. It no longer stood for gold or silver.

A bank is a company that deals in money and other types of financial activities. Banks conduct many types of business, including helping people save money and giving out loans to individuals or businesses that need money for various purposes. In addition to cash, banks often deal in money equivalents such as stocks and bonds.

The most common activity of banks is the collection of money through various types of deposit accounts, such as checking accounts. Most people and companies pay their bills through checking accounts. A check is a written instruction from the depositor to the bank to pay the person or business named on the check using money from the depositor's account. That person or business can then deposit the check in another bank or cash it to receive the money it represents. Banks provide monthly statements to holders of checking accounts so they can keep records of their check transactions. Some banks require a fee for opening a checking account. Others charge fees if the account balance (the amount of money in the account) drops below a certain dollar amount.

Young people can open a savings account at a bank with the help of a parent or relative.

Another type of bank account is a savings account. Savings accounts allow their owners to store money in the bank and earn a small amount of interest. Interest is a percentage of money that the bank pays an account holder for keeping money in the bank. The interest rate, or the percentage amount, changes based on the type of savings account or on the state of the country's economy. The owner of a savings account can withdraw, or take out, money from the account as needed.

Some types of bank accounts combine the features of checking and savings. Certain checking accounts earn interest, for example. However, the account holder often must keep a higher minimum balance in the account.

Another type of bank account is a certificate of deposit, or CD. These certificates generally earn more interest than savings accounts. In exchange, however, they require the account owner to keep the savings in the bank for a set period of time, such as 90 days, a year, or even five years. Withdrawing money earlier than the set end date can result in penalties such as fees.

Дата добавления: 2014-11-29