Just like any other business, a financial institution sells products to earn money so that it can run its operations and provide services. To understand how financial institutions operate, know that when you deposit money in a bank it gets pooled into a shared fund along with everyone else's.
What are the benefits of banking?
Keeping your money in cash puts it at greater risk for theft or loss. The U.S. government protects money you deposit in the bank. A single fund account is insured for up to $250,000 by the Federal Deposit Insurance Corporation (FDIC), which will typically reimburse your insured deposits the next business day. That means you're able to keep your funds safe without having to worry about them being at risk.
Money in the bank can be accessed from anywhere, whether it's online, through an ATM, or just a call to your bank's customer service department. With a bank account, you can arrange for your employer to directly deposit your paycheck automatically into your account, so it's easier and faster for you to get paid.
Reviewing a bank statement — a record of the balance in your bank account and the amounts that have been paid into it and withdrawn from it — makes it easier to manage your finances and stick to a budget. With bank statements, you'll know exactly where your money is going, whether it is toward a car payment or your night out with friends.
Making More Money
Banking allows you to make money with your money. It may sound too good to be true, but with interest, you can earn simply by depositing funds into an account. The bank pays you a percentage of interest on your balance, which is added directly to your account on a monthly basis.