Finance

As the world goes through a credit crunch and financial depression, the word Finance has come to be used more often than before and is now within knowledge of majority of the general public. Finance is a term that is used to define the use or management of funds at all levels. From real estate management, mortgagees, leasing, bank loans, bank account to credit cards all form a part of Finance. The bank account one opens in a bank with a purpose of buying or saving forms the basis of the money circle in any financial market whether locally or internationally. Customers who have excess saving open a bank account to store their money, for the purpose of keeping it safe and in most cases to earn an interest on it. The bank uses the money that is deposited by the customers, to give out loans to others, whether it is individuals looking for loan, large scale organizations and multinational companies or may it be the Government. The loans that are given out by the banks charge a high interest rate as the banks need to earn a profit as well. The other type of bank account is the saving account. That is mainly used to save money for the long term and earn interest on it. In most cases a saving account is opened to save for the future, in most cases there is a restriction that no withdrawal can be made from the saving account until a fixed time limit has passed, for e.g.  Cash can be withdrawn after 2, 5, 10 or 15 years. One major benefit of a saving account that it provides a constant stream of cash flow, as the interest earned on saving account of saving certificates can be availed on a monthly or quarterly basis. This way the investment is also secure at the same type paying of interest as well.

Credit cards are also a part of the financial circle. A credit card is a type of plastic money that is issued to users by banks or financial firms for the purpose to make payment. The holder can buy goods and services using credit card with an obligation to pay for the purchase at a later time. There is an interest rate charged on the use of credit cards and is mainly used for short term financing. The holder of the credit card creates a current account and is issued a credit limit, that is the maximum amount of money that is available in the his credit card balance, from that amount the holder can make payment for the purchases he want to make and pay cash as advance when purchasing. The credit card application in daily life is immense as you can use your credit card for purchase from your local grocery store, to buying books, gadgets or even booking tickets online.

Loans are taken out by individuals or organizations that are short of liquid cash to meet their financial demands. These loans can be used to pay off debt, help in expanding further, meeting the company expenses, purchasing new machinery for the company, on an individual level it could be related to buying a new house, car, paying for children colleges fees, these are some of the main reason for taking a loan.