Why keep a lot of cash at hand when you have a bank account

Hand held cash

The revolution in the Telecommunications industry have greatly improved the way banks operate. Gone are the days when you have to wait hours at the bank to send and receive payments. You can easily make payments using your debit/ credit cards and your mobile phone. Most business merchants have upgraded their system to receive payments electronically. The banks keep on improving their cashless policy schemes. So if you still keep a lot of cash at hand, here are reasons why you should not do so.

High risk: The risk of keeping lot of cash at hand is much higher than when kept at the bank as it could get lost or stolen.

Paying Utility Bills:  It is easier to pay utility bills by instructing your bank to debit your account electronically than going through the hassles of paying in cash.

Obtaining Loan or Mortgage: To obtain a loan or mortgage, you need a bank account to ensure steady automatic payments when due.

Handling large Payments: It is usually safer to handle large payment transactions electronically as the receiver won’t be able to deny in whole or part that payment was made.

Web Transactions:  when doing web transactions on the internet, it is impossible to use cash in hand, you will have to make use of your bank account to transfer and receive payment electronically.

You do need cash at hand, but carrying a lot of it around is unsafe and unnecessary.

Common Financial Terms

Here are some common Financial Terms and their meanings.

ATM: Automated teller machine. The ATM is a machine used to perform cash and cashless transactions such as deposits, withdrawals, payments and so on.

DEBIT CARD: This is a card used to spend as much as you have in your account.

CREDIT CARD: this is a buy now pay later type of card, you can spend more than what you have in your account. interest is charged for any unpaid balance.

DIRECT DEBIT: A setup by your banking institution to allow regular automatic payments such as electric or water bill.

CREDIT: Payment in.

DEBIT: Payment out.

BALANCE: What is left in your account after your credit and debit transactions.

SAVINGS ACCOUNT: An account opened for you by your banking institution for short term savings. When you deposit and hold money, the bank pass you interest for using that money to fund loans. You can access your money at any time and consequently, the interest rate is low.

CERTIFICATE OF DEPOSIT: This type of savings account attracts higher interest rate from deposits made. Your deposits is restricted in some way meaning you cannot withdraw money until after a fixed period.

INCOME: pay after taxes plus any other sources of money to have come in such as alimony and child support.

EXPENSE: money spent or withdrawn from your bank account.

BUDGETING: An itemized forecast of expenses expected for a period in the future.

OVERDRAFT: A process that allows you to spend than you have in your bank account.

SECURED LOAN: A load protected with your property.

MORTGAGE: Mortgage is a long term loan usually used to fund the buying of a home, repayment usually spread between 15-30 years. The borrower also have to prove the ability to maintain monthly payments for the term.

INSURANCE: A means of protecting your savings or property.

INFLATION: A phenomenon whereby the cost of consumer items rises over time.

GROSS PAY: total income.

NETPAY: Take home pay.