Banks provide a safe place for consumers and business owners to stow their cash, as well as a source of loans when needed. They earn money by charging a fee known as interest on the funds they hold, and also from transaction fees. They can be private enterprises, owned by a government, or nonprofits. They can have a physical building, such as the National Bank of France in Paris, or operate virtual branches.
Bankers are trained to understand and manage financial risk, which they do by collecting, analyzing and managing data about their customers, markets and competitors. They use this information to advise people on the best way to manage their money, which includes saving and investing. They must also keep their own assets secure, requiring them to make sure they have sufficient reserves.
How to Choose the Right Bank
The type of bank you choose will depend on your needs, such as whether you want to open a checking or savings account, an individual retirement account (IRA) or college savings plan. You may also consider credit unions, which offer specialized services to members of an organization like a company, labor union or professional group. Many consumers look for a bank with a strong reputation and customer service.
Choosing a bank can be complicated, because different banks have differing fees, benefits and rates. Before you open an account, read reviews of banks in your area and ask friends and family about their experiences with banks they’ve used.