Savings and Banking

History of Banking

Almost from the beginning of banking some sort of note was given to certify that the bank was holding money for the depositor. Originally this was a depository receipt often from a goldsmith who held the gold for safekeeping and it could be redeemed by anyone presenting the note. Thus it became easier to exchange the notes than the gold itself. Goldsmiths learned that not everyone would present notes for the gold at the same time and so they (illegally) began using the gold they were holding for their own smithing business. Thus began Fractional Reserve Banking.

Online BankingThe next step in banking evolution was a passbook which recorded deposits and withdrawals in a small book rather than issuing a separate note for each transaction. Later this evolved into a monthly statement and eventually to an online electronic statement.

Two Basic Types of Accounts

There are two basic types of bank accounts they are Demand Deposits and Time Deposts also known as Checking and Savings accounts respectively. As the name implies demand deposits require the bank to pay you your money “on demand” any time you want while time deposits can place limitations on your withdrawals. In the United States, generally the depositor is permitted to make up to six withdrawals per month in a time deposit account. There is no limit on number of deposits into the account.

Online Savings Accounts

Some financial institutions offer online-only savings accounts. These usually pay higher interest rates and sometimes carry higher security restrictions. One of the biggest online banks in the United States is EverBank®  Which interestingly guarantees to yield in the top 5% of all competitive accounts. Because they don’t have the cost of fancy branch office buildings, they can afford to offer a better return on their FreeNet Checking Account and still maintain a healthy balance sheet, so they will be around when you decide you want your money back.

They are also insured by the FDIC just like your neighborhood bank. But there is an even better reason to look into EverBank®. They also offer some features that are not available at any other bank in the U.S. They have taken on a style similar to the full service banks of Europe. In Europe, banks are one stop financial service supermarkets not restricted to simply checking accounts,  savings accounts and Certificates of Deposit (CDs). If you walk into Barclays in London or Credit Suisse in Zurich you will have a menu of options that would stagger most Americans. You can of course open the typical accounts available in a U.S. bank like checking, savings, money markets, and CD’s  but you can also buy bonds or stocks and even invest in currencies, plus much more. You are not limited to opening an account in the local currency so you can open a checking account in a variety of different currencies, buy CDs in other currencies and even borrow one currency and deposit it as another currency.

EverBank® offers many of these same features including CDs denominated in other currencies and although your principal is guaranteed by the FDIC just like at any other bank you are at risk for currency fluctuations (either in your favor or against you). But in addition to single currencies EverBank® also offers baskets of currencies so you can diversify even further in a single CD. They also offer a division that handles brokerage issues such as stocks and mutual funds, etc.

To get started open either their FreeNet Checking Account or Yield Pledge(SM) Money Market Account first and then you will have easy access to their Currency CDs and brokerage accounts.

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