Question

Describe the advantages of opening a bank account.

Explain two advantages of opening a bank account.

Answer 1

A bank account is very useful to businessmen as well as to people in general. The advantages of opening a bank account are as follows:

1. A person can keep his savings safe and risk-free through a bank account.
2. A bank account encourages thrift and the habit of savings.
3. The account holder can make payments by means of cheques. The payments can be made easily, cheaply and safely.
4. Payments of cheques, drafts and bills can be collected easily.
5. The account holder can easily collect dividends and interest on his securities by giving standing instructions to the bank.
6. The account holder can easily make payments on account of interest, insurance premiums, subscription, fees, etc. by making prior instructions to his bank.
7. Businessmen can obtain funds in the forms of loans, overdrafts, cash credit and bills discounting from the bank.
8. The account holder can buy and sell shares, debentures and Government securities through his bank.
9. The account of bank transactions can be used as a legal evidence, wherever necessary.

Answer 2

1. Safety of Money: There is always a risk in keeping cash at home. It may be lost or stolen. The savings deposited in a bank account remain safe and free from risk.
2. Payment Facility: Payments can be made easily and safely by means of cheques. There is no need to keep a large amount of cash at home. Counting of notes is not necessary. Moreover, the cheques serve as evidence of payment in case of disputes. Therefore, making payments through cheques is always convenient and safe.
3. Collection Facility: The bank collects cheques, drafts, bills of exchange, etc., deposited by the account holder. Businessmen with bank accounts can get their bills of exchange discounted easily.
4. Habit of Savings: Bank accounts promote the habit of thrift and saving in the public. People are prompted to save and deposit money in bank accounts due to the benefits of safety and earning interest.
5. Loans and Advances: Account holders can obtain loans, overdrafts and cash credits from banks.
6. Safe Custody of Valuables: Banks offer lockers to their account holders on a preferential basis. Customers can deposit their jewellery and other valuables in lockers for safe custody.