Question

Discuss any five advantages of having a bank account.

State two advantages of opening a bank account.

Answer 1

Advantages of a bank account:

• Encourage savings: People keep their savings in the bank. This develops the
  habit of saving in a primitive economic system where banks did not exist and
  people either did not save or saved little.
• Mobilisation of savings for investment: Banks play a role of mobilising savings
  for the purpose of investment.
• Loans advanced by a commercial bank: Banks allow the borrower to
  withdraw up to a certain amount on a given security which constitutes stocks of
  goods and bills receivable from others. Interest is paid by the borrower only on
  the actual amount withdrawn from the bank. This enables people to start their
  own business.
• Raise the rate of economic growth: Loans are given for productive activities
  increase the rate of growth of the national income of an economy.
• Assisting foreign trade: Banks extend credit facilities to exporters on easy terms which encourage them to involve in exporting activities. This helps in promoting new ventures and entrepreneurship in the fields of foreign trade.

Answer 2

The advantages of opening a bank account are as follows:
i. Interest income created: Users with small saving amounts earn interest on their savings when they deposit money in the bank. Hence, depositing money in the bank generates income for them rather than letting the money lie idle.
ii. Mobilisation of small savings: Bank accounts help in mobilising the small savings of a vast segment of people. Further, these amounts are transferred for productive investment.