BANK ACCOUNTS

Lea este articulo en español

Bank accounts – who needs them? Well, the short answer is that most of us need a bank account in our lives, especially if we work and are paid for our work.

Those of us who have a bank account may complain about the bank’s service or its charges, but there is no doubt that having a bank account to handle our money is a modern necessity.

In developed countries there has been an enormous movement away from paying weekly wages in cash to paying workers by monthly check or directly through a bank account.

BANK TRANSFERS ARE CONVENIENT

Payment by a check through a bank offers great advantages to the employer: it is more efficient, it is cheaper and it is more secure. In paying through a bank account there is no need for armored cars carrying lots of cash, no need for security guards to look after the cash, and no risk of robbery while the payment is in transit.

However, in the beginning, payment by check was not so good for the employee who was used to receiving cash in his or her hand every week. This was true especially if that employee didn’t have a bank account. For some workers the change to monthly payment was an unwelcome shock.

BANK PAYMENTS POPULAR

In the 1970s, when the movement to paying through a bank really began, most employers, particularly big companies, recognized the benefits of paying wages and salaries direct to a bank account; they did not need much persuasion.

But the workers needed to be persuaded and in many countries the banks hired teams of people to go into workplaces and explain the benefits to the employees. This was very good business for the banks because, although it was costly, they recruited millions of new customers to their bank.

The banks offered the workers incentives like free banking for an initial period. The employers joined with the banks in arranging ‘staged pay’, so that the first pay period would be two weeks, then three. This helped all employees to manage their household budget during the change from weekly wage to monthly salary.

ELECTRONIC BANK TRANSFERS

This whole new banking process added many more people to the middle class and, although no one had thought of the internet in the seventies, it paved the way for a new world of buying, selling and paying for things via electronic transfer.

The other major weapon in the banks’ campaign was the credit or debit card. Without a checking account the normal person would not have access to ‘plastic money’ and life would be very inconvenient, so credit cards and debit cards quickly became very popular.

A checking account is a necessity for the average working person. A savings account is a great idea for children and young people but the savings account is usually too restrictive for the person who needs to receive and pay money on a regular basis.

SAVINGS BANK ACCOUNT FOR KIDS

Youngsters should be encouraged to open a savings account at an early age, even if it is only to deal with excess pocket money and birthday gifts. But for a working person a checking account is needed. In many cases your employer can be very helpful in setting up the account – it is useful to the employer and it acts as an introduction and reference to the bank.

The working person needs a checking (or current) account rather than a savings account. This is not only because a checking account offers more services and flexibility but because, in the modern age – the age of the internet – it is an important part of your identity.

We may question whether a purely financial tool like a bank account should have this exalted position - a bit like a passport or an identity card - but the fact is that it does. In many transactions, especially on the internet, your bank account is crucial, not just to pay or receive money, but to assure other people of your identity. It is almost as if you don’t really exist if you don’t have a checking account.

CREDIT CARD REVOLUTION

Following on in this financial revolution of bank accounts and credit cards comes another element which may be beneficial or detrimental, depending on how you conduct your financial affairs – your credit rating

In opening a checking account you normally agree (you don’t have much choice) that the bank can share your financial information with others. This builds up your credit rating with other financial institutions because your credit rating is a powerful guide to people who don’t know you.

Once you have started earning regular money you might want to buy a motorbike or a car; you might want to rent an apartment. A good credit rating will help to satisfy lenders and make life easier for you. You should note, of course, that your own bank is your best bet for a quick loan at reasonable rates. So try your own bank first.

BE NICE TO THE BANK PEOPLE

Remember that bank computers have long memories. So the conduct of your account is important. You must keep your bank account in good condition – no unauthorized overdrafts, for example – and be nice to bank personnel – they don’t make the rules. The conduct of your bank account is one of the foundations of your credit rating.

In thinking of our banking needs, three points seem obvious:

1.. Get a checking (current) account as soon as you can.

2.  Use the account carefully but take advantage of any special offers.

3.  If you are content with your bank don’t change it unless it’s necessary.

Nowadays there are many temptations from other banks to move your account to them. This can be a good idea in your particular circumstances, especially if it saves you money.

However, even if there is a benefit, you should consider your credit rating – a financial history that shows you changing your bank every year or two does not present a good image.

In addition, changing your bank account can be very inconvenient in your use of the internet – things like subscriptions and so on can be awkward to update, even if no question of paying or receiving money arises.

A BANK AS YOUR BEST FRIEND?

No one nowadays buys the idea that your bank is your best friend – although some banks still advertize themselves as ‘the friendly bank’ – but in a financial sense the essential aid to modern life, apart from money itself, is a checking account with a good bank.

QUESTIONS:

1.   People need a bank account –

a)   if they are unemployed.

b)   if they are accomplished dancers.

c)   when they go into hospital.

d)   when they work and receive wages or salary.

2.   The benefits for an employer paying through a bank are –

a)   they are very amusing.

b)   more documents will be generated.

c)   security and efficiency.

d)   blind faith and militarism.

3.   Employees may not like direct bank payments –

a)   because their wives are annoyed.

b)   if they are used to ‘cash in hand’.

c)   when they go swimming.

d)   because they make their hands dirty.

4.   In the 1970s the banks –

a)   refused to accept new customers.

b)   actively sought out new customers.

c)   declined to pay anybody’s salary.

d)   procrastinated about workers’ bank accounts.

5.   In the seventies the banks offered incentives like –

a)   free vacations every year.

b)   free booze at weekends.

c)   free banking for a while.

d)   free cars.

6.   The other major attraction the banks offered –

a)   was a family photograph.

b)   was the opportunity to have a debit or credit card.

c)   for a limited period, was plastic hats.

d)   was a precisely investigated account.

7.   A savings account is very good for –

a)   children and young people.

b)   tall people.

c)   furry pet animals

d)   shy and reticent people.

8.   A bank checking account –

a)   offers fewer options than a savings account.

b)   induces a general feeling of stupor.

c)   gives the client more flexibility.

d)   had never been thought of in the seventies.

9.   The article says a bank account helps to prove –

a)   some strange ideas.

b)   that your mother-in-law is wrong.

c)   your identity.

d)   your financial strategy.

10. Your credit rating is useful –

a)   for your friends to locate you.

b)   for your brother to borrow money.

c)   if you live in a big house.

d)   for financial bodies who may want to lend you money.

11. One attribute of a bank’s computer is –

a)   that it can record and store a lot of information.

b)   that it comes in a variety of colors.

c)   its ability to keep bank workers warm.

d)   that it can retain obscure recipes.

12. This article recommends –

a)   changing your clothes frequently.

b)   staying with the same bank, if possible.

c)   not having any bank at all, come what may.

d)   starting your own bank.

ANSWERS:

1d, 2c, 3b, 4b, 5c, 6b, 7a, 8c, 9c, 10d, 11a, 12b.